COLUMBIA — South Carolina boat owners can expect to see their property tax bills sink under legislation advancing in the Statehouse.
Currently, boat owners must separately title and pay taxes annually on their boat and each outboard motor at a rate that is the highest in the country, according to advocates.
The bill, approved Wednesday with a 39-1 vote, simplifies matters by creating a single tax bill for the boat and motor and knocking the effective rate down to 6% from the 10.5% rate under state law.
“We have to deal with the reality that it’s unseemly and debilitating to have a double-digit tax basis on these boats,” said Sen. Danny Verdin, R-Laurens.
The measure does this by exempting the first 43% of the boat and motor’s combined value.
Another vote in the Senate will send the amended bill back to the House, which passed it 89-7 last year.
If the House agrees with Senate changes, the measure will then move on to the governor’s desk.
Property taxes are collected by counties, not the state, to fund local services and schools. So, the bill would have no impact to state coffers, though the state Department of Natural Resources would need to update its forms and train staff on the changes. Those costs haven’t been determined.
County collections statewide are estimated to go down by $51 million once the breaks are fully phased in, according to state fiscal analysts.
And unlike a bill expanding property tax breaks for homeowners 65 and older living in South Carolina for at least five years, which the Senate passed two weeks ago, the state won’t step in to backfill the lost boat tax revenue.
The coastal counties of Beaufort, Charleston, Hampton, and Horry, as well as Dorchester and Florence counties already reduced rates on their own and therefore won’t see reduced revenues.
Lexington County will take the biggest hit, with a $9 million deduction, followed by $6 million in Anderson County and $5 million in Greenville County.
Those are the estimates for 2029. To ease the burden, the cuts will be made gradually over three years, starting with 2027, a compromise that the state Association of Counties said it agreed to.
Still, several senators voiced concerns during debate on the floor.
Democratic Sen. Jeffrey Graham, who was mayor of Camden before he was elected to the General Assembly, said firefighters in his district told him they need money for a boat so they can fight fires at waterfront homes going up around Lake Wateree.
This bill takes away local funding, he said. It doesn’t help meet ever-growing expenses.
“I think sometimes up here we engage in these abstract debates where we begin to think that what they do at the local level is just engage in wasteful spending,” said Sen. Overture Walker, who cast the lone “no” vote.
The Columbia Democrat previously was chairman of the Richland County Council.
“The reality is budgets actually mean something at the local level, and with this bill, I know that my county would lose over $2.5 million annually,” he said. “What area should local government cut in? Do you scale back spending on law enforcement? Do you scale back on the public works department? Most people complain about roads and streets.”
Walker said the cost then gets shifted from boat owners to all residents.
Bringing boats back to SC?
Others in the Senate said counties are actually likely to see more money because, by reducing rates, a large percentage of big boat owners have been registering and keeping their boats in other states.
If rates go down, those same boat owners will be more likely to bring those vessels back to the Palmetto State.
“This is not a zero-sum game,” said Sen. Chip Campsen, R-Isle of Palms. “We’re going to gain tax revenue in many instances.”
Of boats sold in South Carolina and valued at $120,000 or more, 80% are registered in other states, according to a study by the South Carolina Boating and Fishing Alliance.
“You can tax boats out of the state and that clearly has happened,” Campsen added.
Only a dozen states charge personal property taxes on boats and South Carolina has long charged the most, said Gettys Brannon who heads the boating association.
The owner of a $50,000 boat in York County pays nearly $2,700 annually in personal property taxes. Across the border in Mecklenburg County, North Carolina, the same boat would cost $378 annually in taxes.
A Franklin County, Georgia, boat owner would pay $476 annually compared to $1,580 charged in Oconee County.
If the bill passes, South Carolina would drop to second or third highest — behind Missouri and parts of Virginia.
Requiring motors to have their own title and tax bill also caused some confusion, and in some cases, instances of double taxing by counties that forgot to deduct the value of the motor from the boat tax bill. That mistake meant the motor value was counted and taxed twice — first on the boat tax bill and again on the motor tax.
More than 368,300 boats are registered in South Carolina, while nearly 164,000 outboard motors are separately titled and taxed, according to the Department of Natural Resources.
Broken down by county, the number of taxed motors ranges from almost 29,000 in Charleston County to just 66 in poor, rural Allendale.
This proposal eliminates the possibility for errors, Brannon said, and can spell big savings — an estimated $1,400 annually for the average boat owner in Richland County for example.
And the loss to counties only comes to about 1% of their budgets in nearly every county, Brannon added.
SC Daily Gazette is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. SC Daily Gazette maintains editorial independence. Contact Editor Seanna Adcox for questions: info@scdailygazette.com.
