Taxes on Tap in South Carolina

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Taxes on Tap in South Carolina

CHARLESTON, S.C. -- An increased tax on tobacco products is gaining momentum among some of the state's most influential business organizations. Some business people also are talking about the need for an increased gasoline tax.

The call for increased taxes is partly in response to the state's fiscal crisis. But the business organizations that may support the increases want to make certain the money goes for targeted needs. Some business leaders say they would support an increased cigarette tax to fully fund the state's Medicaid program, according to The (S.C.) State.

Gov.-elect Mark Sanford has proposed an increased gasoline tax as a way to eventually eliminate the state's income tax. But business is talking about using an increase for road and bridge maintenance.

Two of the state's major business organizations -- the South Carolina Chamber of Commerce and the Palmetto Business Forum -- support a cigarette tax increase to fund Medicaid, the federal-state program that helps pay for health care. The state chamber's board of directors passed a resolution this month reaffirming its support for an increased user fee on tobacco products. The chamber represents 2,200 members, including many of the state's largest businesses.

Some of the urban or large chambers of commerce around the state also may support an increased cigarette tax for Medicaid funding. Ike McLeese, president of the Columbia chamber, said his organization is looking at full funding of Medicaid. "It needs to be done," McLeese said. But the Columbia board hasn't voted on the cigarette tax.

South Carolina has one of the lowest cigarette taxes at 7 cents. The national average is 59 cents a pack. A coalition of organizations related to health care is pushing for an increase of 52 cents per pack.

Pump Issues
While the cigarette tax appears to be gaining momentum, another possible tax increase is waiting in the wings to gain support. South Carolina last raised its gasoline tax in 1987. The 16 cents a gallon tax is the sixth lowest in the nation.

The deteriorating condition of the state's roads and bridges was mentioned at all of the state chamber's grassroots meetings, the report said. An increase in the state's gasoline tax, or some kind of user fee, is considered one of the most equitable ways to do that. The chamber has not tackled the issue of a gas tax increase yet.

Businesses are concerned that poor roads hurt the state's ability to attract and keep industries. An effort to adequately fund road and bridge maintenance is being led by the Business Alliance for Transportation, a 22-member nonpartisan group. The alliance, chaired by former state comptroller general Earle Morris Jr., is expected to present a report to lawmakers in December.

The S.C. Small Business Chamber of Commerce has not taken a position on either an increased cigarette tax or a gasoline tax, said Frank Knapp, the group's executive director, adding the chamber is likely to wait and see where the new governor stands.

ABOVE: South Carolina Gov.-elect Mark Sanford.