Economic Analysis Shows Business License Tax Needs Reform

Business leaders rallying behind business license tax reform bill

On May 6, 2015, more than 100 members of South Carolina’s business community joined state policymakers for the release of an economic analysis that reveals problems with the current structure of the business license tax in the Palmetto State. Dr. Russell Sobel, professor of economics at The Citadel, is the author of the study. In his analysis, “Reforming South Carolina’s System of Business Licensing,” Dr. Sobel concludes that the current system is damaging to South Carolina’s economy and local governments. He underscores the need for reform of the current business licensing structure in order to promote fairness and consistency among all sectors of the business community.

“The licensing system has strayed from its original purpose—it does nothing to ensure the quality or legitimacy of a business, but rather exists simply as an administratively costly form of revenue for local governments,” said Dr. Sobel.

Under current laws, businesses must apply for and receive a license for almost every municipality and county where they work. A single small business that is a local service provider in a metro area, like Greater Greenville, would have to have as many as 30 different business licenses to serve the entire metro area.

“We must reform the patchwork business licensing process that South Carolina’s businesses are required to follow. The current model costs businesses time and money. South Carolina must create a uniform business licensing process that will work well for businesses and local governments.” said Ted Pitts, South Carolina Chamber of Commerce President and CEO. Calvin Snow, Home Builders Association of South Carolina President, and a Home Builder in Spartanburg and Greenville, added that businesses must pass these fees on to their customers and therefore every household in the state pays an average of $500 per year for these fees for no additional services.

Dr. Sobel and leaders from the business community called for leadership in the General Assembly to make this reform a priority, noting that local governments derive their taxing authority from the state.

This study can be read in its entirety by clicking here.