A yearlong review of South Carolina’s tax structure found that the state levies comparatively low taxes but faces “structural deficiencies” that could threaten its ability to raise stable revenue in the future.
The report by the South Carolina Tax Realignment Commission, released Dec. 7, said that “property taxes on private passenger airplanes are amongst the highest in the nation,” and recommended that lawmakers “consider lowering the Assessment Ratio on private passenger aircraft.”
“The General Assembly should conform the tax treatment of aircraft to boats, thus allowing a proration of the taxes,” said the report.
The review, conducted between September 2009 and October 2010, presented a set of revenue-neutral recommendations to improve the state’s competitive position and ensure stable revenue.
The panel urged restructuring and broadening the base of the sales tax, now 6 percent, which it said would allow the rate to drop to 5 percent or lower. It called for consideration of a minimum income tax based on adjusted gross income, and changes to exemptions. Changes to corporate taxes would enhance fairness but not damage South Carolina’s reputation as a business-friendly state, it said. The commission proposed alternatives for updating the gasoline tax, citing loss of tax revenue from increased use of energy-efficient automobiles.
The report described South Carolina’s property tax system as “a product of extremes,” that included “a low tax burden on urban primary residences, very high tax levies on boats and planes, one of the lowest in the country for primary residents over the age of 65 that live in an urban county, and some of the highest national tax rates on commercial and industrial property, and the lowest tax rates on residential property.”
AOPA is studying the report’s recommendations and will review legislative initiatives resulting from it.
AOPA offers this Pilot’s Guide to Taxes that provides general information on state tax policies related to aircraft ownership and use.