The Price of Liberty is Eternal Vigilance
County Council, February 1
A fee to be imposed on credit card payments for property taxes
Tax break for some boat owners?Warwick Jones
First the bad news! If you expect to pay property taxes by credit card in future, think twice. You are about to be charged a fee. And the good news. If you own a boat and can claim it as a second home under the IRS definition, you may be allowed a tax break.
We thought it was too much of a good thing to last. Leave the payment of your property taxes until the day they were due, pay by credit card, and you would not have to write a check for perhaps 2 months – a month’s delay ‘til the receipt of your credit card bill, and another month until the payment date. Of course, it never was quite this good but we could all engineer a delay for a month at least.
Fee paid to service company was $787,229 last year
No doubt payment by credit card is convenient and advantageous for most of us but it is costing the County 1.64% of all the payments made by credit card. Last year, the payment to the processing company amounted to $787,229, up from $501,175 in the previous year. With the County in a tight fiscal position with some large projects before it and loathe to raise millage rates, it is searching for extra sources of revenue. And recovery of this fee is a worthwhile objective. Council voted unanimously to tack the 1.64% fee on all payments for property taxes made by credit card, despite the fear expressed by Council member Schweers that the public will not take kindly to the imposition.
Not all net gain
Will the county be financially better off? Probably, but perhaps not to the full extent of the fee recovery. As noted in the discussion yesterday, many property owners paid their taxes early using credit cards. Now that they have to pay a fee, they may not use a credit card, but at the same time, they may now choose to wait until the January deadline to pay. So if many property owners delay payment, there will be a deferral in receipts into County coffers and a drop in interest income on the accumulated funds. There is also the possible increase in administration costs. The Controller noted that he had been able to cut staff numbers over recent years and over a period when credit card usage had increased. It could be inferred that if there is a big drop in credit card usage, there may be a need for more staff.
Rate charged by service company is low
The payment of taxes by credit card has been possible since 2000. Usage increased dramatically and concomitant with the usage, the fee paid to the service company was lowered to the present 1.64% rate from original 1.82%. Some Council members thought the present rate was still too high and the County should seek a further reduction. It was also noted that the rate was the lowest paid by any County in the State. In the opinion of Council member Thurmond, from his commercial experience it was an unbelievable low rate indeed.
Should boats used as second homes get a tax break?The Finance Committee did not vote to lower the tax rate on boats used as second homes. But there certainly seemed some support amongst members to lower the tax. And despite the agreement to defer a decision and discussion, the Committee went ahead and discussed it anyhow.
The issue was to allow owners of boats used as second homes as per the IRS definition, to pay tax at 6% of the assessed value or to leave the tax at the present 10.5% level. Understandably the starting point in any discussion was the impact on revenue.
Significant revenue effect probable .........
The County Auditor’s office made a very preliminary estimate of a $443,000 fall in tax revenue. But the estimate was based on 448 boats with a length of 40ft or more and all meeting certain conditions relating to sleeping, cooking, and sanitation. One Council member thought that 40 ft was unrealistic and many boats of 30ft or less in length could qualify as second homes. The implication was that the loss could be much more than the Auditor's office calculated. There was no disagreement and a study of the impact was to be widened to include boats to 30 ft. in length.
………but not certain
But the Auditors office gave no assurances as to its calculations. How many boats would be claimed as a second home? And indeed with a reduction of the tax rate, would boats registered in other Counties or States be reregistered in Charleston? The reduction in the tax rate is very significant for those owning expensive boats and Council member Bostic, who is a lawyer, noted that he had formed SC companies frequently to aid out-of-state owners of property to avoid taxes.
Council member Schweers seemed to be the prime mover for a reduction in the tax rate. He cited fairness. It seemed wrong to tax owners of mobile homes at a 6% rate but owners of boats that were also second homes at 10.5%. But Council member Thurmond had a different perspective. At a time when the County was scratching for revenue to avoid a millage increase, it would be wrong to reduce the tax on boats. The whole matter should be deferred until budget time, he said.
Unqualified opinion by External Auditor on County AccountsCitizens should be pleased to know that the External Auditor gave its unqualified approval of the County’s accounts for the last fiscal year. And as in previous years, it praised Council for its account keeping. The Auditor also took the best part of half an hour to go through all of the accounts. And understandably as the Auditor had no questions about the accounts, nor did the Council members.
There was one area of concern though. The Auditor perceived a weakness in cash collection in some areas – Public Works, Solid Waste and Parking Garages. It recommended that an increase in staffing be considered. It evaded an answer when asked as what that number might be. Chairman Scott and the County Administrator Canterbury are to discuss the issue and we got the impression that any net increase in personnel would be over the gasping, if not dead, body of the Chairman.