Sales Tax Could Be Added to Some Services in SC

A panel that studied South Carolina's tax system is recommending that the state sales tax be added to many services that are not taxed now, but the overall sales tax rate would drop.

The Taxation Realignment Commission voted Thursday to recommend to state lawmakers that the state sales tax be lowered to 5 percent. But that sales tax would be added to a long list of services that are not taxed now.

The commission says the state's economy has shifted from one in which people bought mostly things to one in which they primarily buy services. As more and more money goes to services and the sales tax is not charged for them, less sales tax money is coming in.

Commission staff says that in 1947, 39 percent of the personal consumption in South Carolina was services. In 2007, that number had jumped to 66 percent.

But South Carolina taxes only 20 percent of the services that are considered taxable by the Federation of Tax Administrators. The national average of other states is 34 percent.

The list of services that would be taxed includes hair salons, nail salons, fitness club memberships, tanning, weight loss centers and weight loss counseling, body piercing, tattooing, photo finishing, carpet cleaning, pool maintenance and repair, pest control, computer repair and maintenance and storage rental.

You can see a complete list at http://www.scstatehouse.gov/citizensinterestpage/TRAC/ServicesandIntangiblesSubcommittee/TRACServicesandIntangiblesSubcommitteeProposalNew.pdf.

Gym member Madison Dye says, "I'd like to see the tax come down and I don't believe they'll do that. I believe that all taxes are... government's going to spend what they can and they're going to raise revenue everywhere they can."

Fellow gym member Bob Hellams says he's strongly opposed to the idea of taxing his membership and the other services. "I just feel like that we're not a state that can afford to continue to tax people additionally, because nothing will be cut, in spite of what's said. There will be no cutting of taxes. If there is, it will be temporary," he says.

TRAC Chairman Burnie Maybank has been hearing from a lot of people who are upset about the commission's recommendations. But he says, "People are just focusing on the areas of increases without any consideration to the decreases and we would urge the public to focus on the fact that it is a lower rate," he says.

The recommendation will go to state lawmakers, who go back into session in January. It will be up to them to decide whether to adopt them.