Questions and Answers on the 
Local Option Sales Tax 
for Property Tax Relief
1
What is the Local Option Sales Tax for 
Property Tax Relief?
• Passed by General Assembly in 1990 in order to:
– Provide p...
What is Subject to the Local Option 
Sales Tax for Property Tax Relief?
• Applied uniformly in the county in both incorpor...
What does State Law Say on How the 
Funds Can Be Used?
• Enumerated in SC Code of Laws Title 4, Chapter 10, 
Article 1.
• ...
How is the Property Tax Relief (71%) 
Portion Distributed?
• 67% allocated to the county.
• 33% distributed to municipalit...
How is the Property Tax Relief (71%) 
Portion Distributed? (Estimated)
Dorchester County $4,179,845
Summerville $1,259,800...
How is the Discretionary (29%) Portion 
Distributed?
• 50% of money is distributed between county and 
municipalities base...
How is the Discretionary (29%) Portion 
Distributed? (Estimated)
Dorchester County $1,136,398
Summerville $831,075
North C...
Estimated Property Tax Credit Factors 
at 71%
Jurisdiction Collections Appraised Value
Credit 
Factor
County 
Credit per 
...
Estimated Property Tax Credit Factors 
at 100%
Jurisdiction Collections Appraised Value
Credit 
Factor
County 
Credit per ...
Typical Household Impact and the 
Break‐even Point
• Depends on each household.  Sales tax paid 
depends on:
– If they are...
Estimated Typical Household Impact 
at 71%
• Median Household Income: $54,875
• Assuming $150,000 owner‐occupied house 
an...
Estimated Typical Household Impact 
at 100%
• Median Household Income: $54,875
• Assuming $150,000 owner‐occupied house 
a...
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Dorchester Local Option Property Tax Relief Presentation

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This presentation was done by the Dorchester County Finance Department as a way to present the facts about local option property tax relief.

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Dorchester Local Option Property Tax Relief Presentation

  1. 1. Questions and Answers on the  Local Option Sales Tax  for Property Tax Relief 1
  2. 2. What is the Local Option Sales Tax for  Property Tax Relief? • Passed by General Assembly in 1990 in order to: – Provide property tax relief on county and municipal  tax bills. – Provide an alternate revenue source for counties and  municipalities. • 31 of 46 counties in South Carolina have enacted  it. – Berkeley (passed 1996) – Charleston (passed 1990) – Colleton (passed 1990) 2
  3. 3. What is Subject to the Local Option  Sales Tax for Property Tax Relief? • Applied uniformly in the county in both incorporated and  unincorporated areas. • Applies to retail sales subject to state sales tax and unprepared  food purchases.  However, the sale of qualifying food items, where  payment is made with food stamps or WIC vouchers, are exempt  (SC Department of Revenue). • Sales taxes are paid by both residents and non‐residents alike. – 2010 retail study indicates 18% of Summerville retail customers and  10% of St. George retail customers are from outside the retail market. • BEA estimated range of first full year of collections (FY 14‐15):  $8,986,026‐$9,984,472. – Collections begin in May 2014 if passed. – Used most conservative estimate for scenarios ($8,986,026). 3
  4. 4. What does State Law Say on How the  Funds Can Be Used? • Enumerated in SC Code of Laws Title 4, Chapter 10,  Article 1. • 5% of collections over $5M retained by the state to be  given to counties who do not collect a minimum  distribution enumerated in state law (estimated at  $199,301). • Of the remaining amount: – 71% must be used to provide a credit on county and  municipal property taxes (estimated at $6,238,575). – 29% to be distributed to the county and its cities that can  be used at their discretion (estimated at $2,548,150). • A governing body may elect, but is not required to use these funds  for property tax relief. 4
  5. 5. How is the Property Tax Relief (71%)  Portion Distributed? • 67% allocated to the county. • 33% distributed to municipalities. – Funds are then distributed by population to each  municipality. • Must be used for property tax credits on city and  county tax bills. • Establishes a credit factor on tax bills. – Factor calculated by dividing projected sales tax collections  by total appraised value subject to tax. – Factor is multiplied against taxable appraised value for a  credit on the tax bill. 5
  6. 6. How is the Property Tax Relief (71%)  Portion Distributed? (Estimated) Dorchester County $4,179,845 Summerville $1,259,800 North Charleston $636,732 St. George $69,256 Ridgeville $65,113 Harleyville $21,281 Reevesville* $6,548 Total $6,238,575 * Reevesville does not levy a millage. 6
  7. 7. How is the Discretionary (29%) Portion  Distributed? • 50% of money is distributed between county and  municipalities based on the point of sale. • 50% of the money is distributed between county  and municipalities based on population. • Use is subject to each jurisdiction’s discretion. • A governing body may elect individually to  provide additional tax relief above the 71%  portion. 7
  8. 8. How is the Discretionary (29%) Portion  Distributed? (Estimated) Dorchester County $1,136,398 Summerville $831,075 North Charleston $476,748 St. George $61,607 Ridgeville $24,813 Harleyville $15,514 Reevesville $1,995 Total $2,548,150 8
  9. 9. Estimated Property Tax Credit Factors  at 71% Jurisdiction Collections Appraised Value Credit  Factor County  Credit per  $100,000 of  Value Municipal  Credit per  $100,000 of  Value Total  Credit per  $100,000  of  Value Dorchester County $4,179,845 $10,934,439,159 0.000382 $38.23 $0.00 $38.23 Summerville $1,259,800 $3,094,951,192 0.000407 $38.23 $40.70 $78.93 North Charleston $636,732 $1,948,003,776 0.000327 $38.23 $32.69 $70.91 St. George $69,256 $117,377,346 0.000590 $38.23 $59.00 $97.23 Ridgeville $65,113 $27,671,077 0.002353 $38.23 $235.31 $273.54 Harleyville $21,281 $33,491,863 0.000635 $38.23 $63.54 $101.77 9
  10. 10. Estimated Property Tax Credit Factors  at 100% Jurisdiction Collections Appraised Value Credit  Factor County  Credit per  $100,000 of  Value Municipal  Credit per  $100,000 of  Value Total  Credit per  $100,000  of  Value Dorchester County $5,316,243 $10,934,439,159 0.000486 $48.62 $0.00 $48.62 Summerville $2,090,874 $3,094,951,192 0.000676 $48.62 $67.56 $116.18 North Charleston $1,113,480 $1,948,003,776 0.000572 $48.62 $57.16 $105.78 St. George $130,863 $117,377,346 0.001115 $48.62 $111.49 $160.11 Ridgeville $89,926 $27,671,077 0.003250 $48.62 $324.98 $373.60 Harleyville $36,795 $33,491,863 0.001099 $48.62 $109.86 $158.48 10
  11. 11. Typical Household Impact and the  Break‐even Point • Depends on each household.  Sales tax paid  depends on: – If they are savers or spenders. – Where they spend their retail dollar and if it happens  in Dorchester County or another county. – What they buy and if those purchases are subject to  sales tax. • Have established “break‐even point” to show  how much in taxable purchases would need to be  made before the sales tax paid exceeds the credit  received for a typical family. 11
  12. 12. Estimated Typical Household Impact  at 71% • Median Household Income: $54,875 • Assuming $150,000 owner‐occupied house  and 2 cars worth $10,000 each: Jurisdiction Estimated  Credit Break‐Even in  Taxable Sales % of MHI Dorchester County $64.98 $6,498.49 11.84% Summerville $134.18 $13,418.34 24.45% North Charleston $120.55 $12,055.18 21.97% St. George $165.29 $16,528.94 30.12% Ridgeville $465.01 $46,501.36 84.74% Harleyville $173.01 $17,300.53 31.53% 12
  13. 13. Estimated Typical Household Impact  at 100% • Median Household Income: $54,875 • Assuming $150,000 owner‐occupied house  and 2 cars worth $10,000 each: Jurisdiction Estimated  Credit Break‐Even in  Taxable Sales % of MHI Dorchester County $82.65 $8,265.27 15.06% Summerville $197.50 $19,750.06 35.99% North Charleston $179.82 $17,982.48 32.77% St. George $272.18 $27,218.41 49.60% Ridgeville $615.05 $61,504.93 112.08% Harleyville $269.42 $26,941.97 49.10% 13

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