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

1. Questions and Answers on the
Local Option Sales Tax
for Property Tax Relief
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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)
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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).
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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.
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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. 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.
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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.
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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
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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
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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
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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.
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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%
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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%
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