One of the best-known sales tax exemptions in South Carolina is not going to be addressed by a package of tax-reform bills in the state House of Representatives. The House Republican Caucus decided not to touch the current $300 sales tax cap on vehicles so lawmakers could focus on other tax exemptions that might be eliminated or changed.
The sales tax cap has been in place since 1984, when Georgia and North Carolina also had caps. Those have since been removed. Georgia charges the sales tax on vehicles, which is 7 percent in most counties, while North Carolina charges a 3 percent highway use tax.
South Carolina's cap means someone buying a $6,000 used car pays the same sales tax, $300, as someone buying a new $150,000 Porsche or some other expensive vehicle.
It also means the tax in SC on a $152,000 Porsche Panamera Turbo would be $300, compared to $10,640 in Georgia and a $4,560 highway use tax in North Carolina.
Taxpayer Antonio Simon of Columbia says,
"I think if you buy a Lamborghini, then obviously you can afford to pay a few more dollars than someone buying a used Toyota Corolla."
Fellow taxpayer Brandon Allendorf of Columbia thinks the vehicle sales tax cap should at least be indexed to inflation, since it hasn't changed in decades. "I think if they address that, raise it up a little bit, they'd make a lot more money," he says.
Eliminating the cap altogether would bring in an estimated $153 million more a year.
But car dealers have fought for years against any attempts to raise the cap. They say even though it may seem unfair that someone buying an expensive luxury car or sports car pays the same sales tax as someone buying an inexpensive used car, the sales tax cap is necessary to help offset the state's high property taxes on vehicles.
"I just think they should do away with the property tax because, you know, you're paying it every year and it's like you'll never own your car," says Columbia taxpayer Marco Williams.
Joseph Dunn of Columbia agrees. "Do away with one or the other," he says. "Do away with property taxes or do away with the sales tax. It's like you're getting taxed twice on one car."
Since House Republicans decided not to include it in their tax reform package, lawmakers will not be addressing the sales tax cap or the property taxes on vehicles this year.