Kigre within its rights to vote with its feet

info@islandpacket.comFebruary 22, 2013 

The owners of laser component manufacturer Kigre Inc. clearly have the choice to relocate their company sales operations from Hilton Head Island to the Savannah area.

But it's not likely to change the way the town applies its business license ordinance.

The company has been in a years-long dispute with the town over business license fees. Kigre says it shouldn't have to pay on sales made outside South Carolina. The town says it does, and a judge agreed with the town. (Kigre is appealing).

State law lists a business license tax on gross income as one of the ways local governments can raise money to provide services. The local ordinance is clear that it applies to interstate sales that are not subject to taxes in other places.

In Savannah, companies pay business license fees only on business done within the state, according to the city's Revenue Department. Most of Kigre's sales are outside the state, company officials say.

Kigre has argued that the business license fee is unconstitutional, but they might do better to try to change the existing law rather than question its legality.

Opponents of the law claim it has a negative impact on business recruitment and retention on Hilton Head. They haven't convinced town officials of that, and until they do and until the law is changed, the town should collect what it is owed under the law, in the same way it collects fees from other companies doing business on Hilton Head.

Town Council plans to form an economic development corporation to help attract and retain the kind of businesses Hilton Head wants to have on the island. Perhaps the business license fee and how and where it is applied could be a topic of discussion for the new group.

In the meantime, the disagreements between the town and Kigre are likely to continue.

Jeff Myers, the company's chief operating officer, said Kigre plans to keep its manufacturing and research facility on Hilton Head.

Town attorney Brian Hulbert said businesses manufacturing products on the island but selling them through out-of-state offices still must pay a portion of the product's cost.

It would be good to get this sorted out before Kigre goes to the trouble of moving its sales office. At the very least, the town should be clear about what it expects from Kigre if the change is made.

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