COLUMBIA — Business license taxes that vary by city and county across South Carolina have long created headaches for owners that must send thousands of dollars to multiple offices just to legally work in more than one place.
Legislation that would simplify the process — to include a standard application and renewal date, as well as a single website for payments — advanced Thursday to the full House Labor, Commerce and Industry Committee.
“It is the wild, wild West out there when it comes to local business license ordinances,” said Ted Pitts, president and CEO of the South Carolina Chamber of Commerce, which has been urging a fix for years. "This is the most business-unfriendly thing we do in South Carolina."
Nine counties and 231 cities and towns in South Carolina assess and collect business license taxes using complicated calculations that don't take profits into account, according to a letter signed by the chamber and 15 other business groups.
Filling out all the forms and sending in payments can take days away from an employer's ability to actually work, the letter said.
The archaic taxes discourage businesses from expanding their clientele or even locating in South Carolina. It's particularly frustrating for small businesses and contractors, Pitts said.
“I've talked to my municipalities, and they agree this is a system that needs to be fixed. Over my 12 years in this General Assembly, this has been the biggest issue and complaint that I've had,” said state Rep. Mike Forrester, R-Spartanburg.
Business license fees are a significant source of revenue for local governments, bringing in around $400 million annually, and state leaders say they understand the importance of those dollars. The bill wouldn't limit how much a government can charge.
“I don't really see this is an erosion of home rule, because municipalities will be able to continue to set their own rates and be able to make a decision amongst themselves as to how much revenue they need to generate off the business license,” said state Rep. Russell Ott, D-Saint Matthews.
Under the proposal, license fees would be based on business’ gross income from the preceding calendar year. The state's Revenue and Fiscal Affairs Office would operate the online payment site.
“This is an issue that’s very important to many people across the state,” said Rep. Craig Gagnon, an Abbeville Republican. “This is not a thrown-together idea.”
Lawmakers also included a provision that allows the public to view business license applications but allows businesses to keep secret any proprietary financial data or trade secrets. Those would be exempt from the state's open records law.