Lawmakers aim to exempt groceries from possible sales tax

South Carolina legislative leaders say they see no reason why state law can't be changed to exempt unprepared foods bought at grocery stores from a sales tax that voters may decide to impose in Greenville County.

County voters will decide during a referendum on Nov. 4 whether to raise the sales tax by 1 percent over eight years to pay for a major upgrade to the county's road network.

Greenville County officials say they didn't realize when they voted to put the question to voters earlier this year that unprepared foods would be subject to the tax.

They say they never intended the tax to apply to unprepared foods and their projection of what the tax would raise doesn't include revenue from sales of unprepared foods.

They've asked Greenville Republican Rep. Bruce Bannister and other lawmakers to try and change the law so unprepared foods would be exempt.

Bannister, House majority leader, said he has agreed to do it and will try to get the bill passed early in the legislative session that begins in January so unprepared foods would be exempt from the possible tax by the time collections would start in May.

The bill would exempt unprepared foods from any county sales taxes imposed after November 1, 2014, he said.

Bannister said he doesn't see any "natural opponents" to the bill and figures its supporters would include every member of the Greenville County legislative delegation.

"With no opposition, the chances of passage are very good," Bannister said.

Rep. Brian White, the Anderson Republican who chairs the House Ways and Means Committee, which has jurisdiction over tax law, said he also thinks lawmakers would support the change.

"I don't think they'd want to tax the people on something that was not intended," White said.

State lawmakers removed unprepared foods from the list of items taxed under the state's 6 percent sales tax as part of a compromise struck to pass the 2006 property tax relief law called Act 388.

But unprepared foods are still taxed under three of the eight different kinds of sales taxes that state law allows counties to impose by referendum, said Bonnie Swingle, spokeswoman for the state Department of Revenue.

Greenville County Council members picked one of the three, the sales tax for transportation projects, when they devised their road-improvement plan.

At the time, Council members didn't know that unprepared foods were taxed under that particular option, said Council Chairman Bob Taylor.

"When we put together the ordinance we asked the question several times, 'What exactly is going to be taxed?' And the answer we got back was, 'What's going to be taxed is what's taxed now,' " Taylor recalled.

The mistake has provided fodder for sales tax opponents, who have been sure to tell as many voters as possible about it.

Taylor said he's sorry the mistake was made and added that he thinks it is "disgraceful" that some tax opponents are falsely claiming Council members knew all along the tax would apply to unprepared foods.

Taylor said he talked to a longtime friend in the legislature, Republican Sen. John Courson of Columbia, about changing the law and "he didn't see any problem."

Even if lawmakers aren't able to change the law, the 79 other exemptions to the state sales tax would apply to any new tax in Greenville County, Swingle said.

The list of exemptions includes some big-ticket items for the typical household – gasoline, prescription drugs and power bills – as well as such items as livestock, gold bullion, horse trailers and hearing aids.

Lawmakers adopted the exemptions piecemeal after the state first imposed a sales tax in 1951, and each one has its own constituency.

The 1 percent sales tax, if approved during the referendum, would expire automatically after eight years unless renewed by County Council and county voters.

Money generated by the levy would be applied to a long list of improvements that was compiled by a special citizens committee and approved by County Council.

The list includes $673 million worth of projects, mostly road and bridge improvements, but also sidewalks and trails.

At the top of the list is a parallel route that planners say is the best option for cutting congestion on Woodruff Road, Greenville's biggest retail corridor.