Originally created 12/18/06

Local tax law has counties confused

COLUMBIA - State lawmakers wanted to give counties a way to collect property taxes on new buildings sooner. But the attorney general says the new law is unconstitutional, leaving local officials confused about whether to collect the levies.

The state law allows counties to pass local laws so they can collect up to six months of taxes on new construction occupied by an owner by June 30 of each year. But the attorney general's opinion said the local option could result in the same kinds of property being taxed differently among counties.

"We believe a court could find (the new law) is of questionable constitutionality due to the uniformity requirement," the opinion says.

Counties are waiting to see whether the Legislature clears up the constitutional question or until a court has a chance to issue a ruling. But many of the state's fastest-growing counties want to eliminate the loophole that lets property owners delay paying local taxes for up to two years.

Ray Stevens, the director of the state Revenue Department, asked for the attorney general's opinion and has told counties to proceed with caution. If the law is thrown out, counties could have to refund money collected under the new law.

The money is significant.

In Horry County, the change could mean about $4 million in new revenue, assessor Rendel Mincey said. In Lexington County, the law change could have generated about $1.1 million in new taxes by restricting tax breaks on 1,243 new construction projects this year.

Rep. Nikki Haley, R-Lexington, said the large amounts of money involved make it worth trying to fix the problems raised by the attorney general's opinion.

State Rep. Mike Anthony, D-Union, said he favors closing the loophole across the board if the law has to be changed.

"I do not believe it's going to be that controversial," he said.

Another Lexington County lawmaker, Rep. Mac Toole, R-West Columbia, said he sees no problem with the law. "I don't see any unfairness to it."

Generally, counties with lots of development would be most interested in speeding up tax collections, and those where growth is slower would be less interested in making the change.

The South Carolina Association of Counties said on Dec. 1 that the local-option law could withstand a legal challenge, said Robert Croom, the organization's lobbyist. If the law has to be change, the organization would like to see it instituted statewide, but "we prefer ... to preserve the flexibility," he said.


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