March 3, 2017
Highway Funding Bill Passes House of Representatives
Wednesday, the House passed a major highway funding bill on a 97 to 18 vote (a veto proof vote margin).
What the bill does:
- The bill increases gasoline tax by two cents each year over a five-year span.
- It increases the sales tax cap from $300 to $500.
- The “Highway User Fee” applies to in-state residents and vehicles that are registered in South Carolina (includes out-of-state residents who register a vehicle in South Carolina).
- The “Sales Tax” applies to out-of-state residents who purchase a vehicle in South Carolina, but register out-of-state.
- Both taxes are 5% of the sales price and capped at $500.
- Both taxes are to be remitted to SCDMV.
- The bill includes increases in automobile registration fees for automobiles powered by electricity, hydrogen, or any fuel other than motor fuel, and hybrid vehicles.
- Casual sales will pay 5% of fair market value.
- Individuals moving to South Carolina and registering their vehicle for the first time in South Carolina will pay a one-time registration fee of $250.
- The $250 1st time registration fee, the highway user fee, and/or the sales tax do not apply to someone stationed in South Carolina serving active duty military in the United States Armed Forces. Military spouses or dependents are only exempt from the 1st time registration fee of $250.
Examples of how sales would be handled under the legislation as it passed the House:
- If an out-of-state customer buys a car in South Carolina, they would be charged 5% of the sales price up to the maximum sales tax of $500, or the lesser, according to if their state is a reciprocating state or not.
- If a South Carolina resident buys a car in another state, they will pay 5% of the sales price up to the maximum highway user fee of $500 to SCDMV.
- If someone moves to South Carolina and registers their car for the first time they will pay a registration fee of $250.
- If an out-of-state resident buys a car in South Carolina, registers their car in South Carolina, and keeps it at their vacation property in South Carolina, they will pay 5% of the sales price up to the maximum highway user fee of $500.
SCADA was successful at fixing numerous issues found in the legislation. SCADA worked closely with attorneys for the state drafting the legislation to correct errors. These errors include: 1) taking the sales tax cap off of sales to out-of-state residents (this also would have allowed local option sales taxes to also apply), 2) making sure military personnel stationed in South Carolina by orders of the United States Armed Forces were exempt from the highway user fee and/or the sales tax, 3) making Dealers send sales tax revenue to the Department of Revenue, but then sending the highway user fee collected by Dealers to the SCDMV. SCADA requested that Dealers remit both the sales tax and the highway user fee to SCDMV. This simplifies the remittance process.
The bill now heads to the South Carolina Senate where it will likely be debated at length. If passed by the Senate and signed into law, the bill will take effect June 30, 2017.