(Editor’s Note: What follows is the third installment of a four-part series by guest columnist Ben Green aimed at charting a pathway forward for the Columbia, South Carolina Metropolitan Statistical Area as it responds to the coronavirus pandemic. As each installment is published on our news outlet, we will be providing hyperlinks to the complete series below).
by BEN GREEN || The next step required to pump $350 million into our economy in the next twenty-four months is to make intelligent cuts.
In Columbia/ Richland County, the Southeast’s highest property taxes mean higher rents for struggling families. The highest sales taxes in the country (Richland County transportation taxes + Columbia/ Richland County hospitality taxes) mean higher prices for struggling families and diminished demand for local goods and services. Don’t believe me? Look the effect of Japan’s sales tax hikes.
So, what are the recommendations for giving millions of dollars back to citizens and grow the economy?
Suspend the Richland County Transportation Penny Tax for 2 years = $50 million per year.
The implementation and financial management of the Penny Tax has been a disaster, especially from a public confidence point of view. It’s time to furlough the Penny Tax for twenty-four months.
Immediately Refund the “misallocated” Richland County Penny Tax revenue = $41 million one-time.
$41 million is not a lot of money for some politicians. But it’s $106 for every woman, man, and child in Richland County. This means some poor families could get a check for $400+. This is 25x the amount Richland County has pledged towards the coronavirus response so far. Let’s get it done. Today.
Cut the Hospitality Taxes by 50 percent for 2 years = $5+ million per year
The City of Columbia has a two percent hospitality tax. Apparently, Richland County also has a hospitality tax. This tax can reach up to 10 percent on prepared food and other items. I studied Latin at Spring Valley High, have a BA in Finance from Morehouse, and an IMBA from UofSC. And I still can’t make sense of all these taxes.
Let’s give this tax a two-year vacation.
Cut the city of Columbia Business License fee by 25 percent for 2 years = Millions per year
This will help keep hundreds of people in jobs and will allow business owners to keep doors open and companies afloat.
How will the City of Columbia or Richland County make up for these cuts? They’ll reap up to $100 million in annual savings through Step #1: Consolidation of the City of Columbia and Richland County.
Are tax cuts difficult? Sometimes.
Can all this be done immediately? Yes. We have the courage to do it. And we certainly have the urgency.
Immediate Actions to Take
The City of Columbia Council can create a committee to get this done in four weeks or less.
Richland County Council can do the same.
Other municipalities with penny taxes, business license fees can also review options to see if they can get this done. The more, the better. Besides consolidation, nothing is more important or urgent.
Why we will succeed
Japan raised their sales taxes from 8 percent to 10 percent last year, and guess what happened? They immediately saw a 7 percent drop in GDP (gross domestic product). Columbia has had an 8-10 percent sales tax in place for over 5 years. What type of impact has that had on poor and middle-class families and on our local economy?
The Japanese rarely make bold moves so quickly, but they are now considering eliminating their entire 10 percent sales tax this year. They didn’t do this after Fukushima (a.k.a the largest earthquake in modern history), so this tells us how serious the economic situation is. If the good ‘ol boys in Tokyo can get it done, then our dynamic Mayors and Councils from Columbia, Richland and Lexington Counties, and the rest of the Columbia metro will knock this out of the park.
Intelligent consolidation and tax/ fee cutting will finally provide this region with the political, organizational, and fiscal infrastructure it needs to recover and achieve its highest potential.
This newfound infrastructure will allow us to create opportunities for happiness, health, and wealth.
(Editor’s Note: Stay tuned for installment IV on Wednesday).
ABOUT THE AUTHOR …
Ben Green is president and chief operating officer of Insurance Advantage. He’s a former South Carolina business recruiter who opened up the S.C. Department of Commerce’s Japanese office in 2012. Since then, South Carolina has received $2.5 billion in investment from Japan and Korea. Approximately four percent of that investment has been placed in the Midlands.
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