(Source: The Herald)
By The Herald, Rock Hill, S.C.
May 19--While the S.C. House recently approved the so-called "point of sale" bill, final passage will require heavy lifting. That's good news because the measure would cost local governments and schools millions in tax dollars at a time when both already have been hammered by the recession.
The point of sale bill would reverse current tax law, barring the resetting of a property's tax value when the property is sold. Instead, the resetting would be delayed until the county the property is located in undergoes reassessment, which happens every five years.
This is a piecemeal change to Act 388, the statewide property tax reform bill passed in 2006. Under the bill, growth in a home's tax value was capped at 15 percent every five years.
The rationale behind that was to ensure that current property owners were not socked with prohibitive tax bills if their homes rapidly appreciated in value. But a clause in the measure specified that when a home is sold, the property is reassessed and "trued up" to the full market value, and the new owner is taxed on the higher value.
Real estate agents, business owners and other critics have been clamoring for lawmakers to repeal the point-of-sale clause, claiming that it hampers home sales and scares away some buyers.
But local governments strongly object to the proposed repeal. By one estimate, eliminating the point-of-sale reassessment would cost cities and counties $260 million in lost revenues next year, a figure that would increase to $738 million a year in a decade.
The bill also would create an unfair system of taxing homes. New owners never would be responsible for paying taxes on the full value of their property. But homeowners whose houses increase in value by less than 15 percent would pay taxes on the full value of their homes, and the disparity in taxable value as a percentage of market value would grow even larger over time.
Homeowners who live for many years in modest homes that gradually increase in value would be the biggest losers if this new system is put in place.
A divided House approved the point-of-sale bill, 60-45, last week. But two-thirds of state senators must agree even to consider the bill, which appears unlikely.
We hope a failure of the bill to make it to the Senate floor finally will lay it to rest. If lawmakers want to improve the state's tax system, they need to quit tinkering around with piecemeal bills like this and undertake comprehensive reform of the entire system.
This bill doesn't just fail to improve the state's tax system, it makes it worse.
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