Updated: New business license bill creates tax advantages for non-local business
Feb 28, 2017
Updated May 5, 2017:
Business license bills remain in committee
Rep. Bill Sandifer (R – Seneca) and 13 other sponsors introduced two bills, H3650 and H3651, on February 2 that drastically cut city revenues and create tax inequities for small businesses due to special tax exemptions. These bills were recommitted to the committee on March 1 for further work. The Municipal Association staff continues to work with business interests and legislative staff to return the bills to the initial intent of standardizing the business license process. These bills remain in the committee and have not received any action since they were recommitted, missing the crossover deadline for this legislative session.
For questions on these bills, contact Miriam Hair (firstname.lastname@example.org) at 803.933.1204 or Melissa Carter (email@example.com) at 803.933.1251.
Posted February 2017:
The South Carolina House of Representatives may be voting as soon as this week on two bills impacting business licenses across the state. Initially, the Municipal Association and the South Carolina Chamber of Commerce advocated for legislation that would simplify the business license process across jurisdictions with a standardized form and process. Then, Rep. Bill Sandifer (R – Seneca) introduced two bills that would indeed adopt a standardized form, but would also “drastically cut city revenues and create tax inequities for small businesses due to special tax exemptions,” according to the Municipal Association.
We encourage you to read the info below, research this issue and the potential impact to your business, then contact your representatives. Local media coverage includes this editorial in The State and article in the Post and Courier.
The following is excerpted from the Municipal Association of South Carolina:
Business license bills remain on the House calendar
Rep. Bill Sandifer (R – Seneca) and 13 other sponsors introduced two bills, H3650 and H3651, on February 2 that drastically cut city revenues and create tax inequities for small businesses due to special tax exemptions. Both of these bills remain on the House calendar for possible debate…beginning March 1.
Taken together, the bills adopt the standardization measures discussed by business stakeholders and cities. However, the bills also:
- Removes local authority
- Hands out exemptions to special interests
- Creates ambiguities and inconsistencies
- Reduces revenue to cities
Exempts 25 percent of a business’ income that is collected outside of the municipality where the business maintains its principle place of business.
– Imagine Walmart with its headquarters in Arkansas paying a business license tax on only 75 percent of its income when the small business owner struggling to compete with the industry giant is paying on 100 percent.
– Imagine a restaurant with locations in three cities. The owner pays the tax to City A on 100 percent of his income earned from the restaurant in City A. However, he exempts 25 percent of the income earned on the two restaurants located in City B when calculating the tax owed to City B. At the same time, his competitor pays the municipal business license tax on 100 percent of his income earned because all three of his restaurants are located in the same city.
What can you do?
Continue to call your House members and urge them to vote NO on these bills, as they are currently written, that go far beyond the goal of standardizing the business licensing process. Encourage them to support continued work to return the bill to its original purpose of streamlining the business license process without exemptions and control shifted to a state agency. Additional talking points here.
As you talk to your legislators about this bill, please share any feedback with Casey Fields (firstname.lastname@example.org) at 803.933.1256. For questions on these bills, contact Miriam Hair (email@example.com) at 803.933.1204 or Melissa Carter (firstname.lastname@example.org) at 803.933.1251.
Bottom line … both of these bills are bad for cities and bad for the majority of small businesses.