Introduced by Reps. White, Stavrinakis and Merrill

1 Indicates Matter Stricken 2 Indicates New Matter 3 4 AMENDED 5 April 30, 2013 6 7 H. 3561 8 9 Introduced by Reps. White, Stavrinakis and Merrill 10 11 S. Printed 4/30/13--H. 12 Read the first time February 19, 2013. 13 14 15 STATEMENT OF ESTIMATED FISCAL IMPACT 16 REVENUE IMPACT 1/ 17 This bill is expected to decrease sales and use tax revenue by an 18 estimated $1,809,345 in FY2013-14. Of this amount, general fund 19 sales and use tax would be reduced by $1,206,229, the Education 20 Improvement Fund would be reduced by $301,558, and the 21 Homestead Exemption Fund would be reduced by $301,558 in 22 FY2013-14. 23 Explanation 24 This bill would amend Section 12-36-920(B) to not allow sales 25 tax to be imposed on additional guest charges that are readily 26 available to the general public. Additional guest charges include, 27 but are not limited to, room service, amenities, entertainment, 28 special items in promotional tourist packages, in-room movies, and 29 other guest services, such as, spa and salon services, sporting 30 lessons, children’s activities, outside transportation, private tour 31 guides, and the purchase of tour tickets. Based on conversations 32 with the Department of Revenue (DOR), state (2% tax rate) 33 accommodation taxes totaled $50,912,258 in FY2011-12. This 34 amounts to an estimated $2,545,612,900 in hotel industry sales 35 revenue in South Carolina. According to information from the 36 American Hospitality and Lodging Association, an estimated 7.4% 37 of total available hotel properties are styled as “resort” properties 38 and include many of the services listed above. These full-service 39 “resort” hotels charge an average of 70% higher room rates than 40 limited-service hotels, based on information from Smith Travel 41 Research. Multiplying $2,545,612,900 in annual hotel industry 42 sales by a “resort” factor of 7.4% and adjusting for higher room

[3561-1] 1 rates charged at full-service hotels yields an estimated 2 $320,238,103 in full-service “resort” hotel sales. Also according to 3 an analysis of hotel industry financial statements by Smith Travel 4 Research, an estimated 11.3% of full-service hotel room sales are 5 for non-room charges. Therefore, multiplying $320,238,103 in 6 full-service “resort” hotel sales by a factor of 11.3% to adjust for 7 non-room charges and applying a 5.0% sales tax rate yields an 8 estimated $1,809,345 of non-room sales tax revenue in FY2013- 9 14. This act takes effect July 1, 2013. 10 11 Approved By: 12 Frank A. Rainwater 13 Board of Economic Advisors 14 15 1/ This statement meets the requirement of Section 2-7-71 for a state revenue 16 impact by the BEA, or Section 2-7-76 for a local revenue impact or Section 6-1- 17 85(B) for an estimate of the shift in local property tax incidence by the Office of 18 Economic Research.

[3561-2] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND SECTION 1236920, AS AMENDED, CODE OF 12 LAWS OF SOUTH CAROLINA, 1976, RELATING TO TAX ON 13 ACCOMMODATIONS, SO AS TO DELETE CERTAIN ITEMS 14 SUBJECT TO THE FIVE PERCENT TAX ON ADDITIONAL 15 SURCHARGES. 16 Amend Title To Conform 17 18 Be it enacted by the General Assembly of the State of South 19 Carolina: 20 21 SECTION 1. Subsections (A) and (B) of Section 1236920 of the 22 1976 Code, as last amended by Act 56 of 2005, are further 23 amended to read: 24 25 “(A) A sales tax equal to seven percent is imposed on the gross 26 proceeds derived from the rental or charges for any rooms, 27 campground spaces, lodgings, or sleeping accommodations 28 furnished to transients by any hotel, inn, tourist court, tourist camp, 29 motel, campground, residence, or any place in which rooms, 30 lodgings, or sleeping accommodations are furnished to transients 31 for a consideration. This tax does not apply where the facilities 32 consist of less than six sleeping rooms, contained on the same 33 premises, which is used as the individual’s place of abode. The 34 gross proceeds derived from the lease or rental of sleeping 35 accommodations supplied to the same person for a period of ninety 36 continuous days are not considered proceeds from transients. The 37 tax imposed by this subsection (A) does not apply to additional 38 guest charges as defined in subsection (B) or separately stated 39 optional charges on a bill to a customer for amenities, 40 entertainment, special items in promotional tourist packages, and 41 other guest services.

[3561] 3 1 (B) A sales tax of five percent is imposed on additional guest 2 charges at any place where rooms, lodgings, or accommodations 3 are furnished to transients for a consideration, unless otherwise 4 taxed under this chapter. For purposes of this subsection, The term 5 additional guest charges includes, but is not limited to are limited 6 to charges for: 7 (1) room service; 8 (2) amenities; 9 (3) entertainment; 10 (4) special items in promotional tourist packages; 11 (5) laundering and dry cleaning services; 12 (6)(3) inroom movies; 13 (7)(4) telephone charges service; and 14 (8)(5) rentals of meeting rooms; and 15 (9) other guest services.” 16 17 SECTION 2. This act takes effect July 1, 2013. 18 XX 19

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