Rep. Patrick's bill would remove international, interstate sales from business-license equation

bheffernan@islandpacket.comJune 17, 2013 

  • In fiscal year 2013-14, which begins July 1, Beaufort County municipalities estimate collecting business-license fees worth:

    • Beaufort: $3.7 million

    • Bluffton: $1.2 million

    • Hilton Head Island: $7.5 million

Hilton Head Island officials took no action Monday after briefly discussing a bill introduced during this year's legislative session that would help island-based company Kigre Inc., which manufactures laser components.

Kigre has been in a long-running dispute with the town over the same issue addressed by the bill filed by Rep. Andy Patrick, R-Hilton Head.

The issue involves how much a company must pay for business license fees, which Hilton Head and several other local governments determine based on a company's gross revenues. Kigre says that is unfair -- that income derived from out-of-state and foreign countries should be excluded from the calculation. That approach would reduce the fee the town could charge Kigre, whose sales are mostly interstate and international.

Patrick's bill would give Kigre what the town has steadfastly refused to give it: an exclusion on out-of-state and foreign income when determining the fee. Kigre chief operating officer Jeff Myers declined to say how much Patrick's bill would have saved the company.

Patrick said last week he filed the bill to encourage exports and because it would be "good for all businesses throughout the state, not just a company like Kigre on Hilton Head."

The bill stalled in committee, but Patrick said he might reintroduce it next year.

Patrick, who ran unsuccessfully for the 1st Congressional District seat earlier this year, received a campaign contribution from Kigre CEO John Myers, according to online federal election reports. The reports indicate that John Myers, who is identified on Kigre's website as its CEO and is Jeff Myers' father, contributed $1,000 to the Friends of Andy Patrick Committee, the principal campaign committee for Patrick's congressional bid.

Neither John Myers nor Patrick could be reached for comment about the contribution Monday.

However, Jeff Myers said he had talked to Patrick and to "pretty much every political person in the country" about the need for the bill that Patrick later filed.

Patrick filed his bill Feb. 21. John Myers made his contribution to Patrick's campaign six days later, on Feb. 27.

In February 2012, Beaufort County Master in Equity Marvin Dukes III had ruled against Kigre in a court case in which Kigre challenged the legality of the town's nearly 30-year-old ordinance. Dukes rebuffed most of the company's arguments, ruling that the town's method of determining business-license fees was legal.

Patrick said last week his bill was not an attempt to choose sides in the dispute between the town and Kigre.

The town's Intergovernmental Relations Committee took no action Monday after a brief discussion of Patrick's bill, but committee chairman George Williams said he would invite Patrick to a meeting this fall to explain why he filed it.

Patrick's sponsorship of a bill that would bring about a change the town opposes seems unusual for another reason. When Patrick was a contender in the congressional race, three Town Council members endorsed him: Williams, Councilwoman Kim Likins and Mayor Drew Laughlin. In 2010, when Patrick was running for the state House of Representatives, Laughlin contributed $200 to his campaign.

None of the three council members has talked to Patrick about his bill, they said, and don't know enough about it to comment.

Hilton Head charges an annual business-license fee based upon a company's gross sales, as authorized under state law.

Kigre has argued since at least 2006 that the bulk of its sales are to customers in other countries and states, and that it should pay fees based only on in-state sales.

More recently, under protest, the company paid $318,500 in fees and penalties for the tax years 2007 to 2012. Kigre says it was overcharged, and appealed May 17. Town Council ordered the finance department to reassess the bill after Kigre presented tax documents. The town must complete its reassessment within 10 days of a June 11 hearing.

Patrick's bill would sap an important source of revenue for municipalities, according to Bluffton town manager Anthony Barrett, who opposes the bill. Beaufort city manager Scott Dadson said the City Council has not discussed the bill, and he was unsure how it would affect the city if it passed.

Follow reporter Brian Heffernan at twitter.com/IPBG_Brian.

Related content:

Kigre continues fight today against Hilton Head business license fee, June 11, 2013

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