3 new pros join 'Dancing with the Stars'

The celebrity cast for the upcoming season of “Dancing With the Stars” is (back row, from left) NBA player Ron Artest, actor David Arquette, actor and Iraq War veteran J.R. Martinez, TV personality Rob Kardashian, activist Chaz Bono; (seated, from left) TV personalities Ricki Lake and Kristin Cavallari, singer Chynna Phillips, TV host Nancy Grace, soccer player Hope Solo and Italian personality Elisabetta Canalis. The series will premiere Sept. 19 on ABC.

COLUMBIA -- Every gallon of gasoline you pump would cost you 5.5 cents more.

You'd pay 19 cents more each month to run the water from your tap.

The medicines you take to treat your illnesses would cost an additional 88 cents a month.

Turning on the lights and the television would help run up an additional 79 cents a month on the electricity bill for the typical South Carolina household.

You would have to open your wallets for new taxes at the grocery store and get used to paying for sales taxes on more of the services you buy, such as home pest control treatment, pampering at the beauty salon and a storage unit to stash your stuff.

The state's Tax Realignment Commission recommended these changes Thursday for the Legislature to consider when it reconvenes in January. Any change would have to be approved by the lawmakers.

The goal is to create a broad tax base with low overall rates, and the proposal is filled with trade-offs that the commission says will keep state revenue flat while the economic downturn continues. When things pick up, the state will start bringing in more cash from a broader base to pay for government services.

The biggest trade-off is a 1-cent drop in the state sales tax rate to 5 cents on the dollar. The proposal is also designed to take the burden off goods by opening the door wider into the largely untapped source of new tax money -- the service economy.

Sen. Paul Campbell, R-Goose Creek, said the Legislature is going

to take a serious look at the recommendations with one main focus in mind: Not risking the state's ability to create jobs.

"In my opinion, the key to the revenue is not how we tax but putting people back to work," Campbell said.

When people are working, they pay income taxes and shop, two main components that generate cash for state government. As it is now, 42 percent of the state's almost $5 billion budget comes from sales tax, a volatile source that dips and peaks sharply. But just 38 percent of retail sales are taxed in South Carolina, meaning that the state exempts more than it collects in sales tax.

The 11-member commission, appointed by the Legislature, also has sorted through the roughly $2.75 billion in tax exemptions on the books and recommended repealing many of the current breaks, such as those on water, electricity and prescription drugs bought at retail pharmacies.

Critics say the commission's large list of recommendations won't be approved, serving as nothing more than a doorstop. They also contend the Legislature hamstrung the commission by not allowing it to propose changes to the property tax swap of 2006 that increased the sales tax rate to give a break on homeowners' property taxes.

But the time for action has come, said James Fields, executive director of the Palmetto Institute, a nonprofit, nonpartisan and independent think tank.

"It is clear from every study that we have done that our tax structure is broken and there has to be legislative steps taken in order to fix that so that we have a tax that is competitive and equitable and adequate," Fields sad.

Fields said the commission's work is laudable, particularly in regard to taxing services. The recommendations attempt to find a fair way to tax the economy, that has shifted from being dependent on the goods to services, he said.

As it is now, the state taxes just 35 of the 168 services offered here, or 20 percent. Nationally, 57 percent of services are taxed.

Current services taxed include amusement parks, cell-phone service, launderers, photocopying, printing, cable, bulldozers and hotels.

The proposal calls for services to be taxed at the state sales tax rate, which would be 5 percent, if the Legislature adopts the recommendations. Taxes would be levied for the first time on manicures, hair cuts and other services at the beauty salon, weight-loss services, tattoos, carpet and floor cleaners, commercial janitorial services, air-conditioning repair, pest control, security systems and many other items.

The commission still would leave untaxed the service fees charged by doctors and lawyers.

Rep. Mike Sottile, R-Isle of Palms, said he can't say right now whether he could support the commission's recommendations or not. He will have to review the details before making up his mind.

"I am going to be interested in seeing the report," Sottile said. "Right now, I am not interested in taxing the residents of South Carolina any more."

The tax plan

The state Tax Realignment Commission, a panel of financial experts appointed by the Legislature, has put together a package of proposed tax reform that are designed to create a low, broad tax base. One of the main objectives is to lower the overall state sales tax rate of 6 cents on the dollar by at least a penny.

Here's more information on some of the key elements:

The proposal calls for raising the gas tax 5.5 cents, from 16.75 cents to 22.25 cents a gallon. After a year it would drop to 21.75 cents. All of that cash would go to improve the state's roads, and ease the pressure for the Legislature to shift more general fund cash to the aging highways and bridges.

The commission recommends the Legislature restore a state sales tax on groceries, which the Legislature eliminated in 2007. The suggested rate is 2.95 percent.

Under the plan, the tax breaks on water, electricity, natural gas and prescriptions filled in stores would be repealed and tax at 1.25 percent.

The average household spends $1,900 a year on electricity and about $500 on water. Based on that average rate, people would pay 79 cents more a month for electricity and 19 cents more per month for water. Currently, 12 states tax water and 23 states tax electricity.

As for prescription drugs, the average person spends $70 a month at the pharmacy and would pay 88 cents more in taxes, under the proposal. Taxes on medicine would be capped at $100 a year. Consumers — who already pay a tax on medicine administered in doctors' offices and hospitals — could claim additional money spent on their tax returns and receive a tax refund.

Medicaid and Medicare recipients would not be subject to the taxes.

Reach Yvonne Wenger at 803-926-7855 or ywenger@postandcourier.com.