By Bob Pitcher
American Trucking Associations
On May 9, 2017, South Carolina’s legislature easily overrode a veto by Governor McMaster to enact H.3516, which increases the state’s highway funding significantly. First, the fuel tax on both gasoline and diesel, which has been 16 cents a gallon for many years, will rise by 2 cents a year for the next six years, resulting in a tax of 28 cents a gallon by 2023. This year’s 2-cent increase takes effect July 1. This part of the bill will of course provide very substantial new road funds.
Second, the legislation also rolls the existing South Carolina apportioned property tax on motor carrier rolling stock into the vehicle registration system, including registrations issued under the International Registration Plan. For a couple of decades, South Carolina has imposed a property tax, paid by separate report, on motor carriers based in the state and on those with a location there. Although the tax is apportioned on the basis of mileage, the tax rate is quite high. The system has been felt to be unfair, since it leaves exempt many carriers with significant business in the state but which have no South Carolina establishment. Evasion of the property tax is also thought to be widespread. Beginning in 2019, the property tax, renamed the Road Use Fee, will be paid on all commercial vehicles over 26,000 registered gross weight that are registered in the state, including those with IRP registrations. This includes fleets traveling in South Carolina under IRP but not based there. The new fee will be collected at the time of registration and, for interstate carriers, will be apportioned by fleet mileage traveled in South Carolina. The fee itself will still be based on fair market value of taxable power units. (Trailing equipment, which has been exempt from property tax for some years, will continue to be.) Both registration and the new road use fee will be administered by the South Carolina Department of Motor Vehicles.
Finally, H.3516 has beneficial provisions for interstate carriers concerning local taxes and fees. The new law clarifies the point that trailing equipment is exempt from all local fees and taxes. Vehicles registered under IRP, that is, power units, are to be exempt from local road use fees. And local business license taxes, which currently may only be imposed on a for-hire motor carrier by the locality of its principal place of business, will have to be apportioned by fleet miles in the state. Our congratulations to the South Carolina Trucking Association and its president, Rick Todd, who worked for years to get better road funding for the state.