Senate advances bill to reduce effective boat tax rate after lengthy debate; amendment to hold counties harmless tabled

Senators debated and advanced a House bill (H 38 58) reported by the Senate Finance Committee that would reduce the effective assessment ratio used to tax watercraft in South Carolina, with a three-year phase-in.

Committee chair Senator Lawrence described the measure as property-tax relief for boat owners, using a reduction in assessed fair-market-value to move the effective watercraft assessment from the current 10.5% to an effective 6% by exempting 42.8571% of fair market value. The chair and sponsors estimated the change would produce roughly $51.4 million in tax relief when fully phased in.

Senators across the chamber questioned local fiscal impacts. Multiple lawmakers from rural counties warned that the proposal would reduce county revenue materially, in some cases by hundreds of thousands of dollars, and urged a state reimbursement or backstop. Senator Orangeburg offered an amendment to hold counties harmless by providing state reimbursement for lost local revenue; proponents argued that without reimbursement the lost revenue would be borne by non-boat-owning residents through millage increases.

Senator Lawrence and supporters said the bill included a three-year phase-in and administrative changes (e.g., combined registration for watercraft and outboard motors, a $10 registration fee structure) designed to ease implementation and give local governments time to adjust. The finance committee report and several conforming technical amendments were adopted on the floor. The amendment to hold counties harmless was moved and then tabled by roll-call (28 to 12). The bill received a recorded second-reading vote in the Senate by 39 to 1 and will proceed with further consideration and amendments in subsequent stages.

Floor debate included extended questioning about whether lower taxes would repatriate boats registered out of state, the fairness of the current tax compared with neighboring states, and whether the bill would weaken local revenue tools without compensating mechanisms. Sponsors said they had negotiated a phased approach with county stakeholders; opponents said many small counties lack options to replace the foregone revenue.

The committee report adoption, tabling of the hold-harmless amendment and the second-reading vote were recorded in the journal.