SC Taxpayers Speak Out Against Proposed Sales Tax Changes

South Carolina taxpayers let members of the state Taxation Realignment Commission hear, and see, what proposed changes to the state sales tax would mean.

Colon cancer survivor Kimberly Bradstreet of Columbia pulled out three bags filled with just some of her prescription medications to show commissioners.

"There are people whose life depends on prescription drugs," she told the commission. "Prescriptions are not a luxury; they are a non-negotiable."

The commission held a public hearing to get taxpayers' input on its proposed plan. It includes adding a 2.5 percent sales tax to prescription medicines bought at a pharmacy. Those drugs are now exempt from sales taxes.

"Please, if you need to tax something to bring in revenue, which I understand is something you need to do, please do not do it at the expense of the ill in this state. Instead, please, please tax something I have the option not to buy," Bradstreet said.

But while the proposal would mean a tax increase for prescriptions drugs bought at a pharmacy, it would mean a tax decrease for prescription drugs administered at a hospital or doctor's office. Those drugs are now charged the full state sales tax. Under the proposal, the sales tax on them would drop to 2.5 percent.

"So there are winners and losers, but there are as many winners as there are losers in our prescription drug proposal," says TRAC Chairman Burnie Maybank.

The TRAC sales tax proposal would also add a 2.5 percent sales tax to groceries, electricity and water bills. Sue Berkowitz, director of the Appleseed Legal Justice Center, an advocate for low-income families, urged the commission not to add those taxes because they would disproportionately hurt low-income residents.

She told the commissioners, "Low-income people are constantly struggling with keeping their electricity on. We get calls all the time about, 'What do I do?'"

Commissioners argue that their plan would not put too big a burden on the state's poorest residents because the sales tax would not be charged on food bought with food stamps and the prescription drug tax would not apply to those on Medicaid or Medicare.

But Commissioner Don Weaver, director of the South Carolina Association of Taxpayers, says he'll propose deleting the electricity and water taxes. "I think it would be stretching our credibility of revenue neutrality to say that we're going to tax electricity and water. So I can assure you that motion will be made," he told commissioners. The commission says its plan would be revenue neutral, bringing in about the same money as the current system, by charging a lower tax on more things.

But it was the prescription drug proposal that got the most attention Friday.

Julie Houston drove down from Marietta in Greenville County to fight the plan. Her husband Keith is an 8-year survivor of a brain tumor. Some of the medications he took, which would be taxed under the proposal, cost about $5,000 a month.

"While I appreciate the budget challenges that the commission is faced with, placing any additional burden on the patients and their caregivers at this time that they are challenged with surviving their own medical issues is wholly unacceptable," she told commissioners.

The commission will meet again September 2nd to finalize its sales tax recommendation. Its overall plan is scheduled to go to state lawmakers in November. It will then be up to state lawmakers to decide which parts of the plan, if any, to adopt next year.