A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY enacting THE "MUNICIPAL TAX RELIEF ACT" by ADDING CHAPTER 41 TO TITLE 5 SO AS TO AUTHORIZE CERTAIN MUNICIPALITIES TO IMPOSE UP TO A ONE PERFECT SALES TAX TO PROVIDE PROPERTY TAX RELIEF TO OWNER-OCCUPIED HOMES AND TO FINANCE CERTAIN PROJECTS, TO SPECIFY THE MANNER IN WHICH THE TAX MUST BE IMPOSED AND ADMINISTERED AND THE MANNER IN WHICH THE PROPERTY TAX CREDIT IS CALCULATED.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Title 5 of the S.C. Code is amended by adding:

 

CHAPTER 41

 

Municipal Tax Relief Act

 

    Section 5-41-110.  For purposes of this chapter:

       (1) "Core government services" means the essential responsibilities of a municipality that protect public safety, support economic vitality, and maintain critical local infrastructure. Such services include the construction, repair, and improvement of local roads, bridges, and drainage systems, and supportive capital projects, such as police facilities, fire stations, public assembly facilities, emergency response buildings, and related technology infrastructure.

       (2) "Department" means the South Carolina Department of Revenue.

       (3) "General election" means the Tuesday following the first Monday in November in any even-numbered year.

       (4) "Municipality" means a municipal corporation created pursuant to Chapter 1, or a municipal government as the use of the term dictates.

       (5) "Tax" means the municipal tax relief sales and use tax allowed to be imposed pursuant to this chapter.

 

    Section 5-41-120.  (A) Subject to the requirements of this chapter, a municipal governing body of a municipality wholly or partially located in a county that does not impose any tax pursuant to Chapter 10 or Chapter 37, Title 4 or any local law enacted by the General Assembly at the time of the initial successful referendum,  may impose a sales and use tax not to exceed one percent by ordinance, subject to a referendum to be held at the next general election, within the municipality for a specific purpose or purposes and for a limited amount of time. If a municipality is only located partially in a qualifying county, then the municipality only may impose the sales and use tax in the portion of the municipality located within the qualifying county.

    (B) No less than twenty percent of the revenues collected pursuant to this chapter must be used to provide a credit against a taxpayer's municipal ad valorem tax liability pursuant to Section 5-41-170. The credit only may be applied to property assessed pursuant to Section 12-43-220(c). Any revenues not dedicated to tax relief may be used to defray the cost associated with projects authorized in this chapter including, but not limited to, debt service on bonds issued to pay for such projects.

    (C) To impose the tax, the governing body of the municipality shall enact an ordinance which contains the ballot question formulated by the municipality. The ordinance must specify:

       (1) the purpose for which the proceeds of the tax are to be used. If any of the proceeds are to be used for purposes other than a tax credit, the proceeds may be used for projects located within or without, or both within and without, the boundaries of the municipality, and may include the following types of projects:

           (a) highways, roads, streets, bridges, public parking lots, public parking garages, core local government services, and related facilities;

           (b) administration buildings, civic centers, police stations, and fire stations;

           (c) any combination of the projects described in this item;

       (2) the maximum time, in two-year increments not to exceed eight years from the date of imposition, or in the case of a reimposed tax, a period ending on April thirtieth, not to exceed seven years, for which the tax may be imposed;

       (3) at least twenty percent of the amount collected must be used to provide a nonrefundable credit against existing municipal ad valorem tax liability in accordance with Section 5-41-170 on property assessed pursuant to Section 12-43-220(c); and

       (4)(a) if the municipality proposes to issue bonds to provide for the payment of any costs of the projects, the maximum amount of bonds to be issued, whether the tax proceeds are to be pledged to the payment of the bonds and, if other sources of funds are to be used for the projects, specifying the other sources;

           (b) if any of the proceeds are to be used for purposes other than a tax credit, the maximum cost of the project or facilities or a portion of the project or facilities, to be funded from proceeds of the tax or bonds issued as provided in this chapter and the maximum amount of net proceeds expected to be used to pay the cost or debt service on the bonds, as the case may be.

    (D) Upon receipt of the ordinance, the municipality must conduct a referendum on the question of imposing the sales and use tax in the municipality, or portion thereof, that is to be subject to the tax. The referendum for imposition of the tax must be held at the time of the general election. Two weeks before the referendum the appropriate election commission must publish in a newspaper of general circulation the question that is to appear on the ballot, with the list of projects and the cost of the projects. If the proposed question includes the use of sales taxes to defray debt service on bonds issued to pay the costs of any project, the notice must include a statement indicating that principal amount of the bonds proposed to be issued for the purpose and, if the issuance of the bonds is to be approved as part of the referendum, stating that the referendum includes the authorization of the issuance of bonds in that amount. This notice is in lieu of any other notice otherwise required by law.

    (E) The referendum question to be on the ballot must read substantially as follows:

 

    "Must a _____ percent sales and use tax be levied in (municipality or portion therof) for no more than (time) for the purpose of allowing a credit against certain municipal ad valorem tax liability and for the purpose of raising the amounts specified for the following purposes?

 

    (1)   $________ for __________ 

    (2)   $________ for __________ 

    (3)   etc.

 

Yes ☐

 

No   ☐"

 

    If the referendum includes the issuance of bonds, the question must be revised to include the principal amount of bonds proposed to be authorized by the referendum and the sources of payment of the bonds if the sales tax approved in the referendum is inadequate for the payment of the bonds. If the entirety of the revenues collected pursuant to this chapter are used for existing municipal ad valorem tax liability, the question must be revised appropriately.

    (F) All qualified electors desiring to vote in favor of imposing the tax for the stated purposes shall vote "yes" and all qualified electors opposed to levying the tax shall vote "no." If a majority of the votes cast are in favor of imposing the tax, then the tax is imposed as provided in this chapter and the enacting ordinance. The appropriate election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result to the municipal governing body and to the Department of Revenue no later than thirty days after the election. Expenses of the referendum must be paid by the municipality.

    (G) Upon receipt of the returns of the referendum, the municipal governing body must, by resolution, declare the results. In such event, the results of the referendum, as declared by resolution of the municipal governing body, are not open to question except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

    (H) Once a certified copy of the ordinance is filed with the department, for the period of imposition provided in that ordinance, the department may not accept as filed any additional ordinance from the municipality that in any way relates to the tax allowed to be imposed pursuant to this chapter except an ordinance reducing or repealing the existing tax. The department shall accept for filing a certified copy of an ordinance reducing or repealing the tax and that reduction or repeal applies in the manner provided in subsection (D) for imposition.

    (I) When the tax authorized by this chapter is imposed for more than one purpose, the enacting ordinance must set forth the priority in which the net proceeds are to be expended for the purposes stated. The enacting ordinance may set forth a formula or system by which multiple projects are funded simultaneously.

 

    Section 5-41-130.  (A) If the sales and use tax is approved in the referendum, the tax is imposed on the first of May following the date of the referendum. If the reimposition of an existing sales and use tax imposed pursuant to this chapter is approved in the referendum reimposing the tax, the new tax is imposed immediately following the termination of the earlier imposed tax and the reimposed tax terminates on the applicable thirtieth of April, not to exceed seven years from the date of reimposition. If the certification is not timely made to the Department of Revenue, the imposition is postponed for twelve months.

    (B) The tax terminates the final day of the maximum time period specified for the imposition.

    (C)(1) Amounts collected in excess of the required net proceeds must first be applied, if necessary, to complete a project for which the tax was imposed, if applicable.

       (2) If funds still remain after first using the funds as described in item (1) and the tax is reimposed, the remaining funds must be used to fund any projects approved by the voters in the referendum to reimpose the tax, in priority order as the projects appeared on the enacting ordinance.

       (3) If funds still remain after first using the funds as described in item (1) and the tax is not reimposed, the remaining funds must be used for the purposes pursuant to Section 5-41-120(C)(1). These remaining funds only may be expended for the purposes pursuant to Section 5-41-120(C)(1) following an ordinance specifying the authorized purpose or purposes for which the funds will be used.

 

    Section 5-41-140.  (A) The tax allowed by this chapter is an amount not to exceed one percent of the gross proceeds of sales or sales price of all amounts subject to the sales and use tax imposed pursuant to Chapter 36, Title 12.

    (B) The tax imposed pursuant to this chapter must be administered and collected by the department in the same manner that sales and use taxes are collected. The department may prescribe amounts that may be added to the sales price because of the tax.

    (C) The tax authorized by this chapter is in addition to all other local sales and use taxes and applies to the gross proceeds of sales in the applicable area that is subject to the tax imposed by Chapter 36, Title 12 and the enforcement provisions of Chapter 54, Title 12. The gross proceeds of the sale of items subject to a maximum tax in Chapter 36, Title 12, and the gross proceeds of sales of unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons are exempt from the tax imposed by this chapter. The tax imposed by this chapter also applies to tangible personal property subject to the use tax in Article 13, Chapter 36, Title 12.

    (D) A taxpayer required to remit taxes pursuant to Article 13, Chapter 36, Title 12 must identify the municipality in which the personal property purchased at retail is stored, used, or consumed in this State.

    (E) A utility is required to report sales in the municipality in which the consumption of the tangible personal property occurs.

    (F) A taxpayer subject to the tax imposed by Section 12-36-920, who owns or manages rental units in more than one municipality, must report separately in his sales tax return the total gross proceeds from business done in each municipality.

    (G) The gross proceeds of sales of tangible personal property delivered after the imposition date of the tax levied pursuant to this chapter in a municipality, either under the terms of a construction contract executed before the imposition date, or a written bid submitted before the imposition date, culminating in a construction contract entered into before or after the imposition date, are exempt from the sales and use tax provided in this chapter if a verified copy of the contract is filed with the Department of Revenue within six months after the imposition date of the sales and use tax provided for in this chapter.

    (H) Notwithstanding the imposition date of the sales and use tax authorized pursuant to this chapter, with respect to services that are billed regularly on a monthly basis, the sales and use tax authorized pursuant to this chapter is imposed beginning on the first day of the billing period beginning on or after the imposition date.

 

    Section 5-41-150.  The revenues of the tax imposed pursuant to this chapter must be remitted to the department and placed on deposit with the State Treasurer and credited to a fund separate and distinct from the general fund of the State. After deducting the amount of any refunds made and costs to the department of administering the tax not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues and interest quarterly based on point of collection to the treasurer of the municipality in which the tax is imposed and the revenues must be used only for the purposes provided in Section 5-41-120. The State Treasurer may correct misallocations by adjusting subsequent distributions, but these adjustments must be made in the same fiscal year as the misallocations. However, allocations made as a result of municipal code errors must be corrected prospectively.

 

    Section 5-41-160.  The department shall furnish data to the State Treasurer and to the municipal treasurers receiving revenues for the purpose of calculating distributions and estimating revenues. The information that must be supplied to municipalities upon request includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240.

 

    Section 5-41-170.  (A)(1) The amount of any credit allowed pursuant to this chapter is determined by multiplying the property tax value of the property, before the exemption provided in Section 12-37-250, by a fraction in which the numerator is the total estimated revenue allotted to the credit during the applicable fiscal year of the municipality, and the denominator is the total of all property tax value on property assessed pursuant to Section 12-43-220(c) in the municipality or portion thereof in which the sales and use tax authorized by this chapter is imposed, including the value exempted in Section 12-37-250.

       (2)   For purposes of this subsection, "property tax value" means the fair market value as it may be adjusted downward to reflect the limits imposed pursuant to Section 12-37-3140, in the municipality as of January first of the applicable property tax year.

    (B)  If there is any unused credit, then the unused funds must be used to provide a credit in the same manner as provided in subsection (A) over the next three property tax years.

 

    Section 5-41-180.  Notwithstanding any other provision of this chapter, the tax authorized by this chapter may not be reimposed if the reimposition plus any taxes authorized pursuant to Chapter 10 or Chapter 37, Title 4 or any local law enacted by the General Assembly would cause the cumulative rate of state and local sales and use taxes in any portion of the municipality to exceed nine percent.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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