Should Beaufort County's business license be abolished?

zmurdock@beaufortgazette.comNovember 23, 2013 

Farmers, fishermen and timber harvesters no longer have to get a business license in unincorporated Beaufort County, the County Council decided last week.

And some council members also are questioning whether any business should have to obtain one.

"I think this is burdensome; something that's just one more thing that business owners have to deal with every year," Councilwoman Cynthia Bensch said. "I hope we'll eliminate the business tax, license -- period."

Eliminating all business license fees would mean a loss of about $1.5 million in annual revenue to the general fund, according to county data.

"The fact of the matter is, most of the money from the business license tax has wound up in the general fund," Councilman Rick Caporale said. "Is that a bad thing? Well, it helped to moderate the mill rate."

The agricultural exemption approved Monday by council is part of an ongoing review of business-license rules and fees that began last spring, Councilman Jerry Stewart said. The review will include opportunities for business people to weigh in at workshops planned for next year.

FEW COUNTIES REQUIRE LICENSES

All businesses in unincorporated areas of Beaufort County -- except those that now receive the agricultural exemption -- must get a license each year. License fees vary depend on the type of business and its estimated annual gross receipts.

Beaufort County is one of only eight counties in South Carolina that require business licenses, council Chairman Paul Sommerville said at Monday's meeting. Of those, it was one of only three that did not have an agricultural exemption, he added.

"We would be one of only two or three counties in Georgia and South Carolina to collect business license fees from farmers if we don't pass this, so I'm certainly going to support it," Sommerville said Monday.

The agricultural exemption, which applies to only seven businesses, will result in a loss of only $358 in annual revenue, according to Edra Stephens, county director of business licensing.

Although both the number of businesses affected and the amount of revenue involved are small, Councilman Gerald Dawson said Monday he believes the exemption is an important recognition of farming's cultural significance in Beaufort County.

"Here in the Lowcountry, we take pride in conserving our culture, and farming has been done in this part of the country for centuries now," he said. "I think we need to take every step, every measure possible, to make sure it continues for centuries to come."

The exemption applies only to businesses in unincorporated areas, and even if the county abolished its fee altogether, businesses within Port Royal, Bluffton, Hilton Head Island and Beaufort would still be subject to municipal license requirements, county attorney Josh Gruber said.

REVENUE LOST

More than 5,300 businesses currently have county licenses, which brought in more than $1.55 million in fees in the fiscal year that ended in June, Stephens said.

The fees go into to the county's general fund, except for about $50,000 annually that goes toward the licensing office's expenses, county financial officer Alicia Holland said.

In fiscal year 2012, the county collected $1.7 million in business license fees and expects to collect about $1.4 million this fiscal year, according to county data.

County administrator Gary Kubic thinks there is little chance the county could offset that amount simply through efficiencies.

"That's pretty devastating and dramatic; I would not just say, 'OK, go cold turkey,'" he said.

Instead, the county would have to cut spending, increase taxes or do some combination of the two, Kubic said.

Were the county to try recouping the amount using only a property-tax hike, its rate would have to increase by about one mill, he said.

Kubic said that if council ultimately decides to eliminate the tax, it should consider phasing it out over three years. That would give county staff more time to identify potential cuts or revenue gains.

WHAT'S NEXT?

In January, Stewart hopes to host a workshop to give business owners, local chambers of commerce and council members a forum to weigh in on the business license fee.

"Then we'll have an extended period for council members to review and debate and have a plan or resolution before the next budget is finished," Stewart said.

A few ideas already have been mentioned.

If the tax is retained, Kubic and others have suggested the county might use some of the revenue to provide a service to businesses -- perhaps an Angie's List style website that allows people to see customer recommendations and critiques of licensed businesses.

Another possibility is an online "one-stop shop" that would allow businesses to file for and pay all their municipal, county and state business taxes at once, Stewart said.

As the debate moves forward, Stewart hopes council will ultimately answer these questions: "What is the purpose of this tax? How should the funds be used? Should there even be a business license tax?"

Follow reporter Zach Murdock at twitter.com/IPBG_Zach.

Related content:

County may exempt farmers, fishermen from businesses licenses, May 22, 2013

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