S.523 is the Senate Finance Committee’s attempt to solve South Carolina’s infrastructure problems through tax and fee increases. To start, the bill would increase the gas tax by 12 cents, phased in over three years. After this initial 12 cent increase the bill would further increase the gas tax by an inflation factor every year. The inflation increase would be limited to a maximum of two cents a year. The inflation increase would be suspended by the Director of the Department of Revenue (DOR) in the event a further increase would cause the gas tax to exceed the highest gas tax imposed in any Georgia or North Carolina County.
The bill also increases other tax and fees, and imposes other new fees. The other taxes and fees increased by this bill include:
- An increase in driver’s license issuance fees from $12.50 to $25 for a five-year license, and from $25 to $50 for a ten-year license.
- A $16 increase in all biennial vehicle registration fees.
- A new $60 biennial road use fee on hybrid vehicles, and a new $120 biennial road use fee on electric vehicles
- An increase of the cap on motor vehicle sales tax from $300 to $600. 20 percent of the first 300 dollars in sales tax on any motor vehicle would be dedicated to the education improvement act fund, as it is now. 15 percent of the remaining revenue would be dedicated to the State Non-Federal Aid Highway Fund. The remainder of the revenue would be dedicated to the State Highway Fund. Of the revenues dedicated to the State Highway Fund, the Department of Transportation (DOT) would in turn transfer 50 percent of these revenues to the State Transportation Infrastructure Bank (STIB). The STIB could use the monies it receives from DOT for any project on which it can legally expend Act 98 funds.
All of the new revenues raised by S.523 would be split between the State Highway Fund and the Non-Federal Aid Highway Fund, with the former receiving 85 percent of the new revenues, and the latter 15%. Funds in the Non-Federal Aid Highway Fund must be used on non-federal aid eligible secondary roads. One notable exception to this revenue split is the requirement that DOT transfer half of the revenues it receives from the vehicle sales tax to STIB.
Finally, the bill prohibits any revenue it itself raises from being used to hire additional personnel.
First of all, S.523 is blatantly unconstitutional. SCPC has pointed out that the South Carolina constitution requires any bill raising revenue originate in the House of Representatives. This is a Senate bill that raises revenue through a number of tax and fee increases and is therefore unconstitutional.
Secondly, this bill represents the largest tax and fee increase introduced this session for the purpose of roads. We cannot reiterate enough that taxpayers do not need to part with more of their money to fix South Carolina roads, state government needs to better manage the money it has.