The South Carolina State Legislature has limited local governments’ ability to control their general fund revenue generation through the passage of constituent-centered legislation. To ensure the continuation of services those same constituents rely upon daily, community leaders must focus on strict local control and collection of tax revenue.
Most municipal revenue sources can be put into three relatively equal buckets: property taxes, business license taxes and everything else.
Property tax increases are controlled by capping the growth in taxable property values and in the tax rate. Business license taxes are now standardized across all local governments. The spending of local hospitality and accommodations taxes is restricted. Further, State law prohibits the creation of any new local government tax.
Given the tight revenue limitations and ever-growing service needs, it is imperative to guard the available revenue sources that fund local government services.
Outside of fire and police departments, perhaps the most critical administrative service provided by local government is controlling local finances. The Finance Department is responsible for collecting the fine, fee and tax revenue that funds a large portion of the budget, enabling important services to continue. But when was the last time municipal leadership checked to make sure the Finance Department had the resources it needs to fully enforce the local tax laws?
Rather than raise taxes, local government leaders should first make sure the Finance Department has the knowledge and capacity to collect all that is owed. Staff needs to be empowered and trained to make sure that the tax burden is shared equally and fairly, by making sure non-payers don’t shift the burden onto everyone else.
In order to successfully track down non-payers, revenue collection employees must ask questions and double check the information initially provided. Data collection and entry must be accurate and complete. Residential and business property owners deserve both friendly and iron-clad local government finance policies that protect their investment in the community.
A balance of business-friendly customer service and unconditional enforcement can be achieved with intentional effort. The work begins with the steps outlined below:
- Review the information the business used to calculate the tax owed
- Review the internal collection process to confirm it is efficient and effective
- Compare the reported business’s income with the SC Department of Revenue reported income
- Compare the reported business’s income with prior years’ data
- Learn the applicable tax laws
- Use the penalty procedures to keep the delinquent businesses accountable
- Work closely with code enforcement officers to stay current with opening and closing businesses
- Keep organized and current records
The most important aspect of a strong revenue protection policy is recognizing that strict enforcement is not punitive, but rather precautionary. It is deeply respectful of taxpayers, because it keeps the system fair and ensures that everyone shares equally in the success of the community.