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Prefiled Bill Would End All SC Sales Tax Exemptions

Sales Tax Exemptions

Salon owner Tim Shealy cuts a client’s hair.


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One of the bills prefiled in the South Carolina House would eliminate all of the state's current sales tax exemptions, with most of the additional money going to education.

That means you would have to start paying the sales tax on things like groceries, gasoline, electricity and water bills, prescription medicine and services like hair cuts and dog grooming that are exempt now.

"Right now is such a poor economic time, so it's a terrible time to even consider adding on a new fee," says Tim Shealy, owner of a hair salon in Columbia.

The bill was introduced by Rep. Mia Butler Garrick, D-Columbia.

The state Supreme Court is already deciding a lawsuit against the state, in which a taxpayer contends that the current sales tax exemptions are unconstitutional. The court heard arguments in that case at the end of November.

House Speaker Bobby Harrell, R-Charleston, says if the court rules against the state, it would mean a tax increase of nearly $3 billion.

The bill to eliminate the exemptions specifies that most of the new money it would bring in would go to education, with $1 billion of it going for new school buildings, $200 million for at-risk, impoverished, underperforming and rural schools and $100 million for state charter schools.

Salon customer Florence Medlin wouldn't mind paying sales tax on her hair cut and coloring, along with the other items that would no longer be exempt if the bill became law. "I wouldn't have a problem with that, as long as it did go to education," she says.

But Shealy, the salon owner, says, "I'm never for any new tax, because you're just putting money back into the government's hands and their track record has not been phenomenal as far as using good stewardship with what they already have."

Besides education, some of the additional money would go to health care, including $200 million a year for small business health care tax incentives.

There's no timetable for when the state Supreme Court will rule on the lawsuit.

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