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COMMITTEE REPORT
April 22, 1999
H. 3267
S. Printed 4/22/99--H.
Read the first time January 13, 1999.
To whom was referred a Bill (H. 3267), to amend Section 12-36-2120, as amended, Code of Laws of South Carolina, 1976, relating to exemptions from the sales and use tax, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, Section 12-36-2120( )(a), SECTION 1, page 1, line 24, by deleting /eyeglasses/ and inserting / prescription eyeglass and contact lenses and raw materials used in the fabrication of such lenses /; and by inserting after /purchaser/ on line 26 / , but this exemption does not extend to eyeglass frames/.
Amend further, Section 12-36-2120( )(b), SECTION 1, page 1, by inserting after /crutches/ on line 27 / , hospital beds, /.
When amended Section 12-36-2120( )(a) and (b) reads:
/( )(a) prescription eyeglass and contact lenses and raw materials used in the fabrication of such lenses when especially designed or prescribed by an ophthalmologist, physician, oculist, or optometrist for the personal use of the owner or purchaser, but this exemption does not extend to eyeglass frames;
(b) crutches, hospital beds, and wheelchairs; /
Amend further, SECTION 2, line 40, by striking /1999/ and inserting / 2000 /.
When amended SECTION 2 reads:
/ SECTION 2. This act takes efect July 1, 2000. /
Amend title to conform.
HENRY E. BROWN, JR., for Committee.
REVENUE IMPACT1
This bill is expected to reduce general fund sales and use tax revenue by an estimated $5.5 million in FY99-00. Of this amount, general fund sales and use tax revenue would be reduced by an estimated $4.4 million and EIA funds would be reduced by an estimated $1.1 million in FY99-00.
Explanation
This bill would create a sales and use tax exemption on the sale of several medical items. According to data from the United States Health Care Financing Administration, an estimated $120.2 million was expended on vision care products in South Carolina in 1997. An estimated sixty percent of vision care expenditures is for eyeglass purchases only. Multiplying vision care expenditures of $120.2 million by sixty percent and applying a sales and use tax rate of five percent, general fund sales and use tax collections would be reduced by an estimated $3.6 million in FY99-00. This bill would also exempt from sales tax the purchases of all lifts and elevators that aid in the mobility of a disabled individual. Based upon conversations with several medical supply distributors, this item would reduce sales tax revenue an estimated $1.1 million. Based upon data from the Department of Public Safety and conversations with automobile conversion specialists, an average 750 individuals become permanently disabled each year requiring the conversion of a motor vehicle. The average cost of converting a motor vehicle for a permanently disabled individual is $13,000. Applying a five percent sales tax rate, this exemption would reduce general fund revenue by an estimated $500,000 per year. Based upon data from the Department of Public Safety and the Department of Disabilities and Special Needs, an estimated 750 individuals become permanently disabled each year, and an additional 2,000 individuals require the mobility assistance of a wheelchair. This exemption would reduce sales tax revenue by an estimated $162,500. Collectively, this bill is expected to reduce general fund sales and use tax revenue by an estimated $5.5 million in FY99-00.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
TO AMEND SECTION 12-36-2120, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO EXEMPTIONS FROM THE SALES AND USE TAX, SO AS TO EXEMPT PRESCRIPTION EYEGLASSES AND CATEGORIES OF ITEMS AND EQUIPMENT USED IN AIDING THE MOBILITY OF THE PHYSICALLY DISABLED.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-36-2120 of the 1976 Code is amended by adding an appropriately numbered item at the end to read:
"( )(a) eyeglasses when especially designed or prescribed by an ophthalmologist, physician, oculist, or optometrist for the personal use of the owner or purchaser;
(b) crutches and wheelchairs;
(c) equipment, including manual control units, van lifts, van door opening units, and raised roofs, for attaching to or modifying a motor vehicle for use by a permanently physically disabled person;
(d) equipment, including elevators, dumbwaiters, chair lifts, and bedroom or bathroom lifts, whether or not sold for attaching to real property, for use by a permanently physically disabled person in that person's principal dwelling;
(e) equipment, including manual control units, for attaching to or modifying motorized implements of husbandry for use by permanently physically disabled persons;"
SECTION 2. This act takes effect July 1, 1999.
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