Retail incentives don't pay

Savvy business people know they must spend money to make money. Well-informed taxpayers know that government occasionally must, in effect, spend some of their money to promote economic development via tax breaks to businesses. But using such incentives for retail businesses is not a sound investment. That's why the General Assembly should scuttle a proposed incentive package for a new "mega-mall" in Jasper County.

Unfortunately, the S.C. Senate Finance Committee recently approved a plan for an estimated $100 million in tax breaks over the next decade and a half for that "high end" Sembler's mall.

Fortunately, despite that victory, the incentives appear unlikely to get through the full Senate -- an outcome seemingly assured by the firm resolve of Sen. Greg Ryberg, R-Aiken, to block the bill. And even if the General Assembly does still pass it via some legislative end run, Gov. Mark Sanford has expressed strong opposition and would almost certainly veto it.

That's reassuring. The proposed incentives wouldn't just unwisely use public money by cutting sales taxes for stores at the mall in half, from 6 to 3 percent, for 15 years.

They would unfairly -- and probably unconstitutionally -- stack the deck against nearby competitors who would have to keep paying the full sales tax.

The state attorney general's office has issued fair warning on that legal point in a written opinion, pointing out that the incentives package "permits a select few retail establishments to obtain an advantage allowing them to compete in free enterprise with other businesses that are not allowed such an advantage."

Sen. Tom Davis, R-Beaufort, cited that letter and other strong arguments against the tax breaks during recent testimony to a Senate subcommittee.

Supporters of the tax-break deal insist that it would provide new jobs during these hard times. But if those tax breaks help that mall, they're virtually bound to hurt other businesses elsewhere. That's because in retail commerce, such incentives invariably shift, rather than create, financial activity.

Government's limited resources for economic development are much better directed toward manufacturing and knowledge-based enterprises. For instance, the $900 million-plus incentive package that helped convince Boeing to put its new 787 Dreamliner plant in North Charleston will produce at least 3,800 well-paying, full-time jobs.

But costly government incentives for a "mega-mall' would simply produce a shift in lesser-paying retail jobs -- and a foolish waste of public money.