Across S.C., local restaurant taxes getting fresh look
While Charleston’s restaurant tax has drawn few critics, that’s not true in a few other South Carolina cities.
Who has the most at stake?
At least 91 municipalities in South Carolina levy a hospitality or meals tax. Here are the cities that received the most income from it:
Charleston $9.80 million
Myrtle Beach $9.02 million
Columbia $8.36 million
Greenville $6.59 million
North Charleston $4.94 million
Hilton Head Island $4.92 million
Mount Pleasant $3.86 million
Rock Hill $3.66 million
Spartanburg $3.38 million
Florence $2.92 million
Summerville $2.38 million
Sumter $2.01 million
North Myrtle Beach $1.93 million
S.C. Municipal Association. Survey based on Fiscal Year 2010-11, the most recent data available.
As a result, state hospitality leaders want new scrutiny of how local governments spend the taxes they collect from places serving prepared food.
Across South Carolina, about 100 jurisdictions, including most Lowcountry cities and towns, have so-called hospitality taxes or meal taxes — a sales tax of 1 to 2 percent at restaurants and cafes.
State law gave cities and counties the power to collect such taxes 16 years ago, and the income is supposed to be spent promoting tourism. But that state law didn’t get very specific in clarifying what that means, exactly.
“It can be stretched,” said Katie Williams-Montgomery, spokeswoman for the South Carolina Restaurant and Lodging Association. “Sometimes people may make it try to fit into a category where it doesn’t necessarily fit.”
For instance, Richland County Council has been debating whether to use its hospitality income to build four recreational centers in the suburbs, which some feared would mean diverting those funds from the Columbia Museum of Art, Historic Columbia Foundation and the EdVenture Children’s Museum.
And the city of Camden was sued by a citizens group that disapproved of the city’s plans to spend hospitality dollars on a gym, indoor pool and playing fields. City leaders defended the plan, saying the improvements would bring tourists to Camden.
The city delayed its plans, and Circuit Judge Alison Lee could rule in that case soon.
That lawsuit brought the issue to a head. The South Carolina Restaurant and Lodging Association was discussing how to ensure hospitality taxes are spent in a way that benefits the hospitality industry, President and CEO John Durst said.
Durst said his group isn’t waiting for Judge Lee’s ruling before deciding how to weigh in on the issue.
The Restaurant and Lodging Association could ask state lawmakers to pass new, more clear guidelines for hospitality tax expenditures —and possible penalties for local governments that don’t comply — or simply approach local governments whose expenses have debatable ties to tourism.
“What we’re hoping is there can be more uniformity and consistency in how local governments use those taxes,” he said. “Clearly, there is some latitude as to how that terminology is defined as far as specific projects.”
Durst said he hasn’t heard any criticisms about the way these taxes are spent in the Charleston area, but the Lowcountry still has a lot at stake.
At least 10 municipalities in Berkeley, Charleston and Dorchester counties have hospitality fees, and four of them — Charleston, North Charleston, Mount Pleasant and Summerville — collect millions from it each year.
The Isle of Palms, Folly Beach, Kiawah Island, Sullivan’s Island, Moncks Corner and St. George also levy the tax.
Local governments also may levy their own 1 or 2 percent tax on hotel stays, but these local accommodations taxes haven’t triggered the same concerns, Durst said, partly because there’s a statewide review board that can examine and overrule any questionable expenditures.
“One difference between the hospitality or meals tax and the accommodations tax is there really isn’t any teeth in the hospitality tax,” he said.
Across South Carolina, hospitality fees bring cities far more money, according to a fiscal year 2010-11 report from the S.C. Municipal Association. In that year, cities received $92.3 million from hospitality taxes and $23.9 million from accommodations taxes.
The State newspaper contributed to this story. Reach Robert Behre at 937-5771.