Reducing vehicle taxes is a major item for many states this election year, including South Carolina and Georgia.
The problem for South Carolina Gov. David Beasley, a Republican seeking a second term, is that there's no room to cut. He has already allocated for next year all the $408 million the state receives from vehicle taxes.
So he's looking at doing the next best thing: asking the Legislature to empower local governments to cut the tax assessment rate. Vehicle taxes are also used by cities, counties and school districts to help fund their operations.
Though they set the tax rate, the percentage of each type of property's value subject to the tax is set by state law: 10.5 percent of the value of a vehicle or business, 6 percent of an apartment and 4 percent of a single-family home.
The task for local governments and schools will be figuring out how to cover the money that would stop flowing to them as a result of the assessment cut. It's unlikely Beasley will provide enough state money to cover huge local cuts in the car tax as he did in 1995 when the state made large cuts in residential property taxes.
In reality, then -- if Beasley goes through with this plan -- is he'll be putting the onus of cutting vehicle taxes on local governments. Isn't that called passing the buck?
Local officials across the state say if localities cut the vehicle tax, they'll just have to raise property taxes to compensate for the lost funds, i.e., "robbing Peter to pay Paul."
Maybe so, but it might also inspire tax "watchdog" groups to point to waste in local spending to pay for the cuts. Indeed, is Beasley sure he has made all the cuts he can to pare back state government? Many still think state government is too large.
It will be interesting to watch the progress of this legislation in the upcoming General Assembly session. Beasley's plan is slick, but it is better than nothing. At least it provides an opening to cut the onerous vehicle tax.
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