Gas taxes increase by 2 cents, vehicle sales tax by $200

By Seanna Adcox, Associated Press

South Carolina's first gas tax increase in 30 years will help rebuild deteriorated roadways and bridges statewide, but transportation officials caution a smoother ride may still be years away.

 

COLUMBIA, S.C. (AP) — South Carolina's first gas tax increase in 30 years will help rebuild deteriorated roadways and bridges statewide, but transportation officials caution a smoother ride may still be years away.

The state gas tax — currently the nation's third-lowest — will rise by 2 cents a gallon Saturday, to 18.75 cents, under a law approved in May over Gov. Henry McMaster's veto. It's the first increment of a 12-cent hike over six years.

South Carolina is among five states where gas taxes increase Saturday. Elsewhere, the per-gallon tax increases between 3.5 cents and 10 cents.

Other pieces of South Carolina's law taking effect Saturday include a $200 increase in the sales tax cap on vehicles. That means anyone who buys a vehicle, boat or plane worth at least $10,000 will pay $500 in sales taxes. And people moving to South Carolina will be required to pay a one-time, $250 fee to newly register their vehicle bought in another state.

Once fully phased in, the law is expected to raise more than $600 million annually for roadwork. This first year, it's expected to generate less than $180 million, according to estimates by the state's fiscal affairs office.

That's far less than the $1.1 billion annually over 25 years the DOT said it needed to bring the entire network to good condition.

Department of Transportation officials have adopted a 10-year rebuilding plan with the money.

That includes replacing 465 bridges — many of them load-restricted — and spending $50 million annually on safety improvements along the deadliest rural stretches, such as rumble strips, guard rails and either widening shoulders or building them where none exist.

Transportation Secretary Christy Hall urges drivers to be patient. The additional money will "trickle in" during the phase-in, she said, but South Carolinians and tourists will see more road and bridge construction "all over the state with each passing year."

"The poor pavement conditions and countless potholes are spread throughout the system," Brian Keys, deputy secretary for finance, said Thursday. "These conditions did not occur overnight, nor will rebuilding the highway system be accomplished overnight."

The additional money will allow DOT to "turn the corner and start the repairs," Keys said.

The law's $16 increase in annual vehicle registration fees, as well as new biennial fees for hybrid and electric cars — of $60 and $120 respectively — take effect Jan. 1. New fees for out-of-state truckers will take effect in January 2019. College students, low-wage workers, manufacturers, and married, working couples will start benefiting from the law's tax breaks with their 2018 income tax returns.

PENSION COSTS

Also taking effect Saturday is a law designed to shore up South Carolina's pension system for public workers.

It means most workers' take-home pay will shrink, since the budget provided no across-the-board living raise.

But the law specifies that workers' rates won't rise again, while their taxpayer-supported employers will face annual increases through 2022. The 7-percentage-point hike in employers' contribution rates over the next six years means taxpayer-supported entities will cumulatively put an additional $3 billion into the system. Once the hikes are fully phased in in 2022, employers will contribute $827 million more into the system annually than they currently do.

The state budget that takes effect Saturday includes an additional $150 million for pension contributions. That fully covers the law's required 2017-18 rate hike for state agencies funded primarily by state taxes and covers half the increase for other employers in the system, including colleges and local governments.

It's unclear if the Legislature will help cover those increases in future years.

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