Taxes, no matter the type, are so super sensitive a subject that their importance can become lost in the emotional discussion. Americans pay a lot of federal, state and local taxes on income, real estate, personal property, and retail purchases, to name some basic ones.
The debate in Columbia – again – is about increasing (or not) the state’s measly 16-cents-a-gallon gasoline tax. This should be a straightforward matter. But the S.C. Senate and Gov. Henry McMaster have muddled the matter like mint for a julip. And the Horry County Council is poised to extend a hospitality tax initiated in 1996. It’s collected on sales of food and beverages, lodging and admission fees and raises $38 million a year.
Initially, the 1.5 percent charge was to pay for RIDE I projects such as S.C. 22 and S.C. 31. The hospitality tax was necessary because of the miserably low gasoline tax. It’s a fact that we would not have these vital roads, and those built in RIDE II and RIDE III, without the sales taxes funding them. Bear with us here, we understand this seems convoluted – that’s because it is.
The 1.5 percent (RIDE I ) tax was set to expire in 2022; RIDE I projects will be paid off in a couple of years, so Horry Council is set to extend the 1.5 percent tax now. This timing evidently will bypass requirements of a state law limiting such taxes to 1 percent. The council’s final vote is likely in May.
An ordinance was approved on second reading in April with no public comment; few outside the council were aware of the matter. Only one council member, Harold Worley, objected.
“We’re raising taxes on people before we know what we are spending it on,” he said.
Since the tax has been collected for two decades, it’s not quite accurate to describe this as raising taxes, although many people view extension of a tax the same as a new tax.
County Manager Chris Eldridge told the council money from the tax might be used to help finance Interstate 73, completion of S.C. 31 and other tourism-related projects, such as beach renourishment and equestrian centers.
“We have the cart before the horse,” Worley said.
He, other members (Al Allen, Cam Crawford and Tyler Servant) and chairman Mark Lazarus suggested future revenue should be for roads.
Quite correctly, Lazarus noted Horry County has plenty of road needs, including the long-sought interstate, which is critical for economic development beyond increased tourism. Like most of South Carolina, Horry County is growing in residents and visitors and the need for road improvements will grow. The hospitality tax is similar to the gasoline (motor fuel) tax because tourists also pay it. Indeed, a significantly larger percentage of hospitality tax revenue is collected from visitors.
No doubt, a good case can be made for continuing some of the 1996 hospitality tax for future highway improvements. That’s what needs to happen, with much greater transparency than shown to this point.