Tax panel hears pleas for relief

COLUMBIA -- Kimberly Bradstreet, a teacher and cancer patient, laid out three gallon-size plastic bags filled with the prescription medicines that keep her alive.

Then she pleaded with the Tax Realignment Commission not to add to her already substantial medical bills by taxing prescription drugs bought at local pharmacies.

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"Please, please, tax something I have the option not to buy," the 28-year-old West Columbia resident said.

The commission is giving her request and others some consideration. The panel of financial experts is rethinking its plan to charge more for prescription drugs, water, electricity and online purchases after getting an earful Friday from taxpayers and advocacy groups.

The commission will weigh the comments before voting in September on a final set of recommended changes to South Carolina's sales tax rates.

The 11-member group was appointed by the Legislature to sort through the roughly $2.75 billion in tax exemptions on the books and recommend ways for the cash-strapped state to generate money for government services.

Any changes must be voted on by the Legislature, which goes back in session in January.

At the core of the commission's dozens of recommendations is a call for the state to lower the overall sales tax by a penny and add a 2.5-cent tax on unprepared food, in addition to the rate that local governments tax consumers at retail and grocery stores.

This week, GOP gubernatorial nominee Nikki Haley said she favors putting the state sales tax back on groceries and eliminating the corporate income tax.

Democratic gubernatorial candidate Vincent Sheheen said he's against restoring the statewide sales tax on food.

Commission Chairman Burnie Maybank said the proposal to tax prescriptions purchased at drug stores is a trade-off that would be used to lower the 6 percent sales tax on medicine administered in doctors' offices and hospitals. All drugs would be taxed at 2.5 percent under the plan.

Sue Berkowitz, director of the Appleseed Legal Justice Center in Columbia, said taxing basic necessities such as prescriptions would make it even more difficult for the working poor to pay their bills. Maybank countered that the commission's proposal isn't necessarily a hardship.

"Depending on what the working poor were purchasing," he said, "they'd be winners many days and losers other days."

Berkowitz used the same argument to oppose taxing water and electricity, but she didn't have to do much persuading on that issue.

Commissioner Don Weaver said he will urge the commission to disregard that recommendation.

Likewise, Commissioner Jimmy Addison said he has concerns about the proposed changes to the sales tax rate for prescriptions, and wants the panel to discuss it further.

Weaver also said he thinks the panel needs to weigh the potential harm that taxing online purchases would have on South Carolina businesses. Rebecca Madigan, executive director of the California-based Performance Marketing Association, said South Carolina businesses would have to close shop if the state starts taxing online purchases.

About 2,800 state-based companies sell online advertising to out-of-state retailers. But rather than charge consumers South Carolina's 6-cent sales tax rate, Madigan said those online advertisers just won't pay to market their products on the state-based websites.

Without the ads, Madigan said, state-based companies, such as blogs and newspapers, would lose revenue and many would go out of business.

But not all of the commissioners were swayed.

Commissioner Kenneth Cosgrove said purchases made online put South Carolina-based companies at a competitive disadvantage because they have to charge the sales tax and the others don't.

"We have all these retailers in South Carolina that pay property tax," Cosgrove said.

"They employ South Carolinians. They support our state and local communities. And they're at a 6-percent disadvantage."