Gas Tax Increase, New Fees Tied to Roads Bill Go Into Effect July 1

COLUMBIA, SC (WLTX) - Car shoppers may face some sticker shock this weekend when the state’s new roads bill becomes law, triggering new and increased and fees and taxes.

The cap on the state’s sales tax on cars — in the new law called an "infrastructure maintenance fee" — will increase from $300 to $500, a hike likely to hit hardest those shopping for used cars and less expensive models.

Darla Booher, owner of Deal Depot in Greer and one of those who has spoken out against the increase, said her dealership is trying to entice customers to buy before Saturday and to educate them about the change.

“I think it’s going to have a very disparate impact on lower-income citizens, senior citizens, people on disabilities, the single-parent families,” she said. “I think they are going to be shocked to realize their sales tax is no longer $300, it’s $500. If they’ve come prepared and they only have so much money, it could be a real shock to them.”

The roads-funding law is perhaps the most prominent one that will go into effect July 1, the start of the next fiscal year.

Senate Majority Leader Shane Massey, an Edgefield Republican, said most bills are written to become effective as soon as they are signed by the governor.

“July 1 usually has to do with budgetary issues, which is why the roads bill became effective then,” he said.

Other bills going into effect July 1 include one addressing reform of the state’s pension system, a bill to increase the size limit allowed for fishing flounder, and a bill to make it easier for crime victims to obtain the services they need from one government office.

The new road-funding law raises taxes and fees that will total about $600 million more per year for the state Department of Transportation when they are fully phased in.

In addition to the sales tax cap, the new law also:

— Raises the state’s 16.75-cents per gallon gas tax by 2 cents beginning Saturday, and another 2 cents per gallon in each of the following five years.

— Raises the biennial vehicle registration fee by $16.

— Creates a new fee of $250 for new residents to South Carolina registering their vehicles. Active military are exempt as are immediate family members.

— Creates new biennial fees of $60 on hybrid vehicles and $120 on electric vehicles.

— Increases the share of the gas tax for county transportation committees from 2.99 cents per gallon to 3.99 cents per gallon, over three years.

The law also provides a number of tax breaks, including a credit to help offset the cost of the gas tax increase for those who keep their receipts on gas purchases. But those credits cannot be claimed until next year or after.

Drivers should not begin tracking their gas tax credit expenses until Jan. 1, according to the state Department of Revenue, and cannot file for the credit until 2019.  The credit sunsets in seven years.

Much of the work to be funded by the new fees will be phased in over the next six years as the fees are phased in.

“It took a long time for our roads to deteriorate to the condition they are in and it will take a long time to dig out of the hole,” said Senate Transportation Committee Chairman Larry Grooms. “But at least the resources will be there.”

House Majority Leader Gary Simrill, a Rock Hill Republican who guided the legislation in the House, said residents will see work this year on a rural road safety improvement program as well as some resurfacing of roads.

“This is a six-year roll-out on the road funding,” he said. “But that was on purpose, because there is not a workforce in place. If you put too much money into that system now, or try to accomplish too many projects, it would spike the cost of the projects because there are not enough contractors to do the work.”

That doesn’t mean everyone understands the work will take time.

“I was at a high school graduation party and a lady got all upset,” Grooms said. “She said, ‘Now that you’ve passed your gas tax bill, I still have potholes on my road. They’re still there. I don’t understand this.’ She was about as serious as she could be.”

The new law also gives the governor new power to appoint highway commissioners and the authority to remove them without legislative approval.

It also sets new ethics requirements for commissioners.

The law also increases the cap on the state sales tax for boats, planes, motorcycles and self-propelled construction equipment from $300 to $500. Buyers must pay the lesser of 5 percent of the purchase price or $500.

Booher said she fears some chaos at first because she believes not only will some consumers be surprised by the higher sales tax but some independent dealers may not understand the new system.

She said the fee must now be submitted to the state Department of Motor Vehicles instead of the Department of Revenue.

"I think there are going to be a lot of dealers who are going to be blindsided by it," she said. "I can see where they would not collect the right amount of sales tax in July. I can see where that would be a problem."

She said if a customer buys a vehicle but doesn't get a registration, then the fees are submitted to DOR.

"I think it's going to be challenging from an administrative point of view to be sure we get all the dealers educated, the consumers educated and get all the people at DMV and DOR on the same page," she said. "It's kind of a shame that it takes effect so quickly without enough time for real good training and communication about it."

Also beginning this weekend is the state's pension reform law.

The state's pension program is underfunded by about $24 billion and is used not just by state employees but also local government workers and teachers.

The legislation passed this year would boost revenues going to the fund by increasing the amount employees pay from 8.66 percent to 9 percent of their annual pay.

School districts, universities and local governments also will pay more under the new law, with scheduled increases of 1 percent more each year through 2022.

State agencies also will pay 1 percent more starting this weekend.

 

 

 

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