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COMMITTEE REPORT
March 30, 2000
H. 4445
Introduced by Reps. Robinson, Wilkins, Quinn, Barfield, Barrett, H. Brown, Chellis, Cotty, Dantzler, Fleming, Gamble, Gilham, Hamilton, Harrell, Harrison, Hinson, Huggins, Keegan, Koon, Law, Leach, Littlejohn, Martin, Meacham-Richardson, Riser, Rodgers, Sandifer, D. Smith, Stuart, Taylor, Walker, Young-Brickell, Seithel, Cooper, Whatley, Tripp, Allison, Altman, Beck, Campsen, Cato, Davenport, Easterday, Edge, Frye, Haskins, Kelley, Knotts, Lanford, Limehouse, Loftis, Lucas, McGee, McKay, Perry, Rice, Sharpe, Simrill, R. Smith, Trotter, Vaughn, Webb, Witherspoon and Woodrum
S. Printed 3/30/00--H.
Read the first time January 13, 2000.
To whom was referred a Bill (H. 4445), to amend Section 12-36-2120, as amended, Code of Laws of South Carolina, 1976, relating to sales and use tax exemptions, so as to reduce by one percent a year the State portion of sales tax on food items, 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, beginning on page 1, by striking SECTIONS 1 and 2 and inserting:
/ SECTION 1. Section 12-36-2120 of the 1976 Code is amended by adding an appropriately numbered item at the end to read:
"( )(a) effective January 1, 2005, food items eligible for purchase with United States Department of Agriculture food coupons, but this exemption does not apply for local sales and use taxes except where such taxes specifically exempt these items;
(b) effective January 1, 2001, the governing body of a county by ordinance may exempt items described in subitem (a) of this item from any local sales and use tax imposed in the county which by its terms does not otherwise exempt such items. This local exemption may extend to all or a portion of the local tax."
SECTION 2. Notwithstanding the rates of tax imposed pursuant to Chapter 36, Title 12 of the 1976 Code, the rate of tax imposed pursuant to that chapter on the gross proceeds of sales, or the sale price of food items eligible for purchase with United States Department of Agriculture food coupons, is four percent for sales from January 1, 2001, through December 31, 2001, three percent for such sales from January 1, 2002, through December 31, 2002, two percent for such sales from January 1, 2003, through December 31, 2003, and one percent for such sales from January 1, 2004, through December 31, 2004. Eighty percent of the revenues from sales taxes raised by the special tax rates provided by this section must be credited to the general fund of this State and used as sales taxes are used, and the remainder must be credited to the Education Improvement Act Fund. Except where otherwise exempt, the local sales and use taxes authorized by law continue to apply to those sales subject to the reduced state rate of tax provided in this section./
Renumber sections to conform.
Amend totals and title to conform.
ROBERT W. HARRELL, JR., for Committee.
REVENUE IMPACT1
The amended bill would reduce sales and use tax revenue by an estimated $24,600,000 in FY2000-01. Of this amount, general fund sales and use tax revenue would be reduced by an estimated $19,700,000, and Education Improvement Act funds would be reduced by an estimated $4,900,000.
Explanation of Amendment
This amendment provides for a four-year graduated reduction in the sales tax rate on food purchases beginning January 1, 2001 until food is wholly exempt from sales taxation by January 1, 2005. The amendment would reduce sales and use tax revenue by an estimated $24,600,000 in FY2000-01. Of this amount, general fund sales and use tax revenue would be reduced by an estimated $19,700,000, and Education Improvement Act funds would be reduced by an estimated $4,900,000. general fund sales and use tax revenue would be reduced by an estimated $41.1 million in FY2001-02; $44.8 million in FY2002-03; $48.7 million in FY2003-04; and $52.9 in FY2004-05, and Education Improvement Act funds would be reduced by an estimated $10.3 million in FY2001-02; $11.2 million in FY2002-03; $12.2 million in FY2003-04; and $13.2 in FY2004-05. When the legislation is fully phased-in by FY2004-05, the proposed legislation would reduce sales and use tax revenue on grocery store items by an estimated $259.0 million.
This bill would provide for a four-year graduated reduction in the sales tax rate on food purchases beginning October 1, 2000 until food is wholly exempt from sales taxation by October 1, 2004. The proposed legislation would reduce sales and use tax revenue by an estimated $36.9 million in FY2000-01. Of this amount, general fund sales and use tax revenue would be reduced by an estimated $29.5 million, and EIA funds would be reduced by an estimated $7.4 million. When the legislation is fully phased-in by FY2004-05, the proposed legislation would reduce sales and use tax revenue on grocery store items by an estimated $293.3 million.
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 SALES AND USE TAX EXEMPTIONS, SO AS TO REDUCE BY ONE PERCENT A YEAR THE STATE PORTION OF SALES TAX ON FOOD ITEMS WHICH LAWFULLY MAY BE PURCHASED WITH UNITED STATES DEPARTMENT OF AGRICULTURE FOOD COUPONS, TO EXEMPT COMPLETELY FROM THE STATE PORTION OF THE TAX ALL SUCH FOOD AND MEALS EFFECTIVE OCTOBER 1, 2004, TO PROVIDE FOR THE USE OF THE REVENUE FROM THE REDUCED RATES OF TAX DURING THE PHASE-IN PERIOD, AND TO ALLOW A COUNTY BY ORDINANCE TO EXEMPT FOOD ITEMS FROM LOCAL SALES AND USE TAXES.
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) effective October 1, 2004, food items eligible for purchase with United States Department of Agriculture food coupons, but this exemption does not apply for local sales and use taxes except where such taxes specifically exempt these items;
(b) effective October 1, 2000, the governing body of a county by ordinance may exempt items described in subitem (a) of this item from any local sales and use tax imposed in the county which by its terms does not otherwise exempt such items. This local exemption may extend to all or a portion of the local tax."
SECTION 2. Notwithstanding the rates of tax imposed pursuant to Chapter 36, Title 12 of the 1976 Code, the rate of tax imposed pursuant to that chapter on the gross proceeds of sales, or the sale price of food items eligible for purchase with United States Department of Agriculture food coupons, is four percent for sales from October 1, 2000, through September 30, 2001, three percent for such sales from October 1, 2001, through September 30, 2002, two percent for such sales from October 1, 2002, through September 30, 2003, and one percent for such sales from October 1, 2003, through September 30, 2004. Eighty percent of the revenues from sales taxes raised by the special tax rates provided by this section must be credited to the general fund of this State and used as sales taxes are used, and the remainder must be credited to the Education Improvement Act Fund. Except where otherwise exempt, the local sales and use taxes authorized by law continue to apply to those sales subject to the reduced state rate of tax provided in this section.
SECTION 2. This act takes effect upon approval by the Governor.
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