SC Lawmakers To Consider Ending $300 Sales Tax Cap on Vehicles

A South Carolina House subcommittee that's been studying the state's tax code is expected to recommend that the state eliminate its current $300 sales tax cap on cars, trucks, boats and planes.

Chairman Tommy Stringer, R-Landrum, says the subcommittee's report should be released within the next few weeks.

"We're looking at examining the cap on everything in the code section, and we're looking at what's being done in Georgia and North Carolina to try to establish some parity there," he says.

Georgia and North Carolina don't have sales tax caps on vehicles. North Carolina doesn't officially charge the sales tax on vehicles, but it charges a 3 percent Highway Use Tax, which is charged each time a title is transferred, so it has the same effect as a sales tax.

South Carolina's current cap means someone buying a $6,000 used car pays the same sales tax as someone buying a Rolls Royce, a multi-million dollar yacht or a jet.

Columbia driver Skipper Irish says that's not fair. "You're not doing it based on the value of the vehicle, and you should be taxing based upon the value of the vehicle. That's what you do with everything else in life," he says.

But car dealers vow to fight the change.

Columbia dealer Bruce Dyer says, "We're just real concerned about raising taxes at any time on our consumers and the South Carolina people, especially when they're already paying heavy-enough property taxes every year."

Columbia driver Doug Boykin agrees. "If you do away with the $300 (cap) then it's actually going to be more, so we'll start paying, the small man will start paying more, more taxes, actually."

Rep. Stringer says, "We obviously don't want to hurt car sales, especially coming off as bad a recession as we've had. However, part of what we're trying to do is make it a more fair, equitable system. And we're going to make sure that everything is revenue neutral."

Lawmakers have talked before about raising or eliminating the sales tax cap but never have. One of the reasons was concern that eliminating the cap would put South Carolina dealers at a competitive disadvantage with dealers in North Carolina and Georgia. But now that those states don't have caps, that's no longer an issue.

House and Senate leaders also say tax reform is one of the most important issues they plan to deal with this year and eliminating some sales tax exemptions is a big part of that reform.