Originally created 08/24/04

Lower tax could reduce services



AIKEN - The city of Aiken wants to make its business tax fairer by modernizing its classification system, but attempts to lighten the burden on business owners could mean fewer city perks such as landscaping and cheap garbage collection rates.

The Aiken City Council listened to more than three hours of testimony and explanation of the tax code at a special meeting Monday to address concerns from members of the business community, many of whom warned leaders that the city's excessive business license fees are scaring off newcomers.

After hearing from people such as Carlos Garcia, the council decided to take action.

Mr. Garcia, who owns RCS Corp., a construction firm that does business across the country, said his business tax will rise from $8,600 to $18,000 next year because of the company's increased business, almost all of which is done outside the city.

"From a business standpoint, it doesn't make sense to stay," he told the council. "I don't have to be here."

Mr. Garcia pointed out, like several business owners, that he could easily move to the county, where there is no business tax.

Business owners in the city pay their fees based on a percentage of their gross receipts, whether their work is done in Aiken or somewhere else. The exception is income generated in other cities where a business license is required to work.

Only state lawmakers can change that.

The city council did choose to review the city's Standardized Industrial Classification system used to lump businesses into one of eight categories based on their income potential and ability to pay the tax. The system was adopted in 1979 and is outdated, council members decided after hearing that some doctors are paying more taxes than construction and plumbing companies that make more money.

They directed Aiken's finance department to reclassify the 3,000 businesses that pay city taxes according to the North American Classification System, which is more in line with incomes reported to the Internal Revenue Service. The council also could consider reducing tax rates.

Such measures could mean some businesses pay more and others less than they do now. It could also mean the $1.5 million the tax generated for the city goes down, which City Manager Roger LeDuc warned would mean fewer city-provided services.

Reach Josh Gelinas at (803) 648-1395, ext. 113, or josh.gelinas@augustachronicle.com.