Taxes are going up more than $500 for some businesses in Port Royal. Here’s why
Port Royal Town Council, set to standardize the town’s system of licensing businesses, delayed a decision on the ordinance Tuesday and agreed to have more detailed discussions next month.
Members were set to implement the proposal, which would simplify licensing but significantly increase taxes for some businesses. But after Councilman Kevin Phillips recommended that the taxes be discussed in more detail, they decided to slow down.
Mayor Joe DeVito said the business taxes would be discussed more in October, possibly in an executive session in October. DeVito said the council will consider closing the meeting so it does not identify the businesses that will see the biggest decreases and increases in license tax, or the tax amounts.
Business license applications are public records, although tax amounts are exempted because they are tied to gross receipts.
To close a public meeting, public bodies must identify one of six exceptions cited in the state’s Freedom of Information Act. Among those reasons for closing a meeting can be discussion of employment, contract negotiations, proposed sale or purchase of property, legal advice relating to pending, threatened or potential lawsuits and investigative proceedings.
Brooke Plank-Buccola of the town of Port Royal said 1,029 businesses will be affected.
Of those, 13 businesses will see an increase of more than $500 in the taxes they pay yearly to obtain a business license in the city. One will see an increase of $3,000. Seven of those businesses are local; six are corporations that do business in Port Royal, among other locations.
Another 22 businesses will see decreases of more than $500, she said.
Changes to the local business licensing structure are being made across the state as a result of the S.C. Business License Standardization Act, which will make it easier to get and renew business licenses, especially for businesses that operate in multiple counties. All municipalities will use the same online portal and have the same business license renewal deadlines.
To implement the new system, cities and towns must re-balance business license tax rates to prevent a revenue windfall during the 2022 business license cycle, said Charlie Barrineau of the Municipal Association of South Carolina, adding there will be winners and losers in that process.
That means Port Royal won’t collect more revenue in the process, but how much businesses pay will decrease or increase depending on their income.
Port Royal had kept up with adjustments in the taxes over the years, so the change to the standardized system won’t have as much impact as in some communities, Barrineau said.
Business license tax revenue is a crucial source of revenue for local governments, accounting for 20% to 50% of income, Barrineau said.
About a decade ago, he said, business groups began questioning the licensing system. They noted business taxes were due at different dates in different towns. The system was particularly complex for businesses operating in multiple jurisdictions, Barrineau said. Some businesses had to hire an accountant to make the calculations and payments to the differing local governments, he said.
The city of Beaufort is going through the same process of re-balancing the revenue from the businesses but has yet to implement the changes.
For 51% of Beaufort’s licensed businesses — 1,142 businesses — the taxes would go down under the proposed changes. They would go up for 47%, or 1,046 of the businesses.
Sixty-eight Beaufort businesses would see increases of at least $500 in license taxes.
