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Municipal Association cites flaws in uniform business license bill

Government
Chuck Crumbo
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Debate over two bills aimed at standardizing the process of obtaining a business license are expected to resume Wednesday in the state House of Representatives and as far as one interested party is concerned both measures have problems.

“They’re both not good for the cities and for locally owned businesses,” said Reba Campbell, deputy executive director of the Municipal Association of South Carolina.

One of the bills, “South Carolina Business License Tax Standardization Act” (H.3650), was introduced earlier this month by Rep. Bill Sandifer, R-Oconee, chairman of the Labor, Commerce, and Industry Committee.

The bill would create a uniform process of obtaining business licenses across South Carolina and make the Secretary of State responsible for collecting business license fees through a central filing location online.

The second measure, (H.3651), would prohibit the state municipal association or any other political group from collecting business license taxes and insurance taxes.

The South Carolina Chamber of Commerce has called on the Legislature to standardized business licensing process to make it easier for a business to operate in different cities, towns and counties without having to obtain a license from each entity.

Ted Pitts, president and CEO of the chamber, also supports a bill that would establish one expiration date for a business license and the ability for a firm to file online through the Secretary of State.

One of the association’s objections to the business license standardization bill, (H.3650), is that it exempts 25% of a business' income collected outside of the municipality where the business maintains its principal place of business, Campbell said.

One example she offered was a national retailer like Wal-Mart, which has its headquarters in Bentonville, Ark., paying a business license tax on only 75% percent of its income when the local mom-and-pop retailer pays a license fee based on 100% of its income.

Giving the Secretary of State the job of issuing business licenses and collecting fees violates the state Constitution, which gives the cities authority to work together to perform government functions, such has having the municipal association collect and disburse business license taxes to members.

Additionally, a standard fee and due date would be problematic, Campbell added. She noted that for some municipalities, business fees might account for 25% of the local budget. Other cities, that have a variety of revenues sources, might want to charge lower fees, she added.

For example, if the legislature passes the law the city of Columbia could lose $8.3 million a year. If the city wants to make up for the loss, it would have to boost the fee for a business license by 53%, The State newspaper reported.

“It all goes back to local control,” Campbell said.

Reach Chuck Crumbo at 803-726-7542.

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