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COMMITTEE REPORT
May 16, 2001
H. 3383
Introduced by Reps. Coates, Allison, Barfield, Barrett, Battle, Bingham, Bowers, Harvin, Hayes, J. Hines, Koon, Lucas, McGee, Owens, Sandifer, Scarborough, Sharpe, Sheheen, Sinclair, G.M. Smith, J.R. Smith, Talley, Thompson, Walker, Weeks and Witherspoon
S. Printed 5/16/01--H.
Read the first time January 30, 2001.
To whom was referred a Bill (H. 3383) to amend Section 12-36-2120, as amended, Code of Laws of South Carolina, 1976, relating to sales tax exemptions generally including the exemption for the sale of natural gas, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
ROBERT W. HARRELL, JR. for Committee.
REVENUE IMPACT1/
This bill is expected to reduce general fund sales and use tax revenue by an estimated $142,080 in FY2001-02. Of this amount, general fund sales and use tax revenue would be reduced by $113,664 and EIA funds would be reduced by $28,416 in FY2001-02.
Explanation
Current law exempts natural and liquefied petroleum gas used to produce poultry, livestock, swine, and milk. Natural and liquefied petroleum gas used to cure tobacco is also exempt from sales and use tax liability. This bill would exempt propane gas from sales and use tax used to heat greenhouses that grow agricultural plants that will eventually be replanted. These plants could include tobacco transplants and various horticultural products grown in the state. Based on conversations with Clemson University Agricultural Extension Service officials, approximately 90 percent of the state's tobacco harvests now originate from greenhouses as opposed to outdoor plant beds. Based on data from the South Carolina Agricultural Statistics Service and conversations with Clemson University, tobacco farmers in the state can expect to harvest an estimated 30,600 acres of tobacco in 2001-2002 that originate from greenhouse transplants. According to tobacco production cost estimates compiled by Clemson University, the state's tobacco farmers utilizing greenhouse technology can expect to consume approximately 581,400 gallons of propane gas to heat their greenhouses at an average price of $1.15 per gallon in 2001-2002. Based on conversations with Clemson University, greenhouses used in the production of horticultural products require more than three times the propane to produce their harvests compared to the propane required by tobacco farmers for similar purposes, or 1,889,550 gallons. Multiplying the average cost of gas per gallon of propane by the gallons of propane estimated to be consumed by tobacco farmers and horticulturists to grow their harvests in 2001-2002, and applying the five percent sales tax reduces General Fund sales and use tax revenue by an estimated $142,080 in FY2001-02. Of this amount, General Fund sales and use tax revenue would be reduced by $113,664 and EIA funds would be reduced by $28,416 in FY2001-02.
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 TAX EXEMPTIONS GENERALLY INCLUDING THE EXEMPTION FOR THE SALE OF NATURAL GAS, LP GAS, AND ELECTRICITY TO PRODUCE CERTAIN AGRICULTURAL PRODUCTS OR ANIMALS SO AS TO PROVIDE THAT SUCH EXEMPTION ALSO INCLUDES THE SALE OF PROPANE GAS FOR THIS PURPOSE AND TO PROVIDE THAT THE SALE OF THESE GASES OR ELECTRICITY TO PRODUCE AGRICULTURAL PLANTS IN GREENHOUSES THAT WILL SUBSEQUENTLY BE REPLANTED IS ALSO EXEMPT FROM THE SALES TAX.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-36-2120(32) of the 1976 Code, as last amended by Act 171 of 1991, is further amended to read:
"(32) natural, propane, and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk and to produce agricultural plants in greenhouses that subsequently will be replanted;"
SECTION 2. This act takes effect upon approval by the Governor.
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