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Business License Process Should Remain Under Local Governance

January 2020Mayor John McCann as seen in The Hilton Head Sun

Welcome to the New Year. This is another year that I, and my fellow Town Council members, have an opportunity to serve you. Collectively, we look forward to using our authority to proactively and positively address issues important to our community.

South Carolina's constitution and home rule act grants us this judicious power.  However, our state lawmakers are considering legislation that eliminates municipal home rule power such as regulating single-use plastic bags, where a vaping business can be located, and the Town's ability to efficiently collect business licenses fees. These and the many other similar policies like them should be determined here locally and not in Columbia.
We are particularly concerned about the potential loss of control over the assessment and collection of business licenses fees. The pending legislation, H4431, as written would preempt our authority to levy a business license tax.

With the substantial fees we collect from business licenses, we are able to provide services, maintain parks and pathways, support economic and community initiatives, and address other public needs.  These fees also help offset the need to collect higher property taxes on residential homeowners to fund these public services. Any effort to repeal local control of business licenses will reduce sources to address the welfare, public safety and property rights concerns of our residents and businesses, in a manner that is best suited to their needs.

H4431 has other undue impacts:

  • It will require more documentation from businesses to assure equal treatment and could facilitate "creative" accounting to completely reduce any tax liability whatsoever.
  • It would lower revenues for cities and towns, resulting from how business license taxes would be calculated.
  • It gives greater deductions before tax payments to non-resident owned businesses. Resident-owned businesses won't have this advantage.
  • It exempts certain businesses from the tax based on their structure or accounting practices and shifts the tax burden to businesses that cannot afford the tax.
  • It shifts critical functions of business licensing to the South Carolina Secretary of State office, which currently has no role or experience in administering local business licenses tax.

It behooves us to protect our ability to manage our business license processes locally and sustain the level of services we provide in our community. Relinquishing this authority to the state could lead to potential cuts in services and programs. To find out how this law could affect your business and our community, I encourage you to contact our local representatives - Senators Tom Davis and Margie Bright Matthews, and Representatives Jeffrey A. "Jeff" Bradley, William G. "Bill" Herbkersman, and Wm. Weston J. Newton.

You can track H4431 and contact legislators through https://www.scstatehouse.gov/.