Update May 10: The same day the legislature approved a gas tax increase, Gov. Henry McMaster (R) issued his expected veto. The South Carolina House voted 95-18 at 11:40 a.m. on May 10 to override the veto, and sent the bill to the Senate for consideration of a veto override. The Senate took up H.3516 at 1:30 p.m. ET and voted 32-12 to grant final approval of the legislation.

Original post: The South Carolina House concurred with the Senate on May 9 and approved legislation to raise an estimated $640 million annually in recurring revenue for road repair and maintenance.

House Bill 3516 includes:

  • Gradually increasing the state’s fuel tax by 2 cents-per-gallon annually over the next six years, beginning July 1 (12 cents-per-gallon total, resulting in a state gas tax rate of 28 cents-per-gallon);
  • Instituting a $120 fee for vehicles powered by anything other than motor fuel and $60 fee for hybrid vehicles;
  • Increasing biennial registration fees for passenger motor vehicles by $16;
  • Creating an ‘Infrastructure Maintenance Fee’, charged on the purchase of motor vehicles and capped at $500 (replacing the current $300 sales tax on motor vehicles);
  • Instituting a $250 one-time fee for motor vehicles transferred from another state; and
  • Charging out-of-state commercial truckers a fee based on miles driven annually within the state.

In exchange for these tax increases, several tax credits are offered to offset the cost, including an earned income tax credit, two-wage earner tax credit, tuition tax credits, and manufacturing, business, and personal property tax reductions. Additionally, South Carolina drivers will be able to obtain a rebate for the extra cost by itemizing gas and service costs on income tax returns (sunsets after six years).

H.3516 also imposes several South Carolina Department of Transportation reforms, including a governor-appointed commission of nine members (seven representing congressional districts and two at-large members).

Both chambers passed their own versions of H.3516 earlier in the year, and a bipartisan conference committee was appointed on May 3. The conference committee reported a compromise on May 5. The bill was passed in the Senate with a vote of 32-12 on May 8, and the House followed the next day with a vote of 99-20.

Both chambers passed the bill with a veto-proof majority, an important step as Gov. Henry McMasters (R) has vowed to veto the legislation. The last day of the session is May 11, but the legislature will return for sine die adjournment on May 23, giving lawmakers an opportunity to override a veto.

South Carolina last increased the state gas tax in 1987. If South Carolina approves H.3516, they will be the fifth state in 2017 to increase taxes on motor fuel to support needed transportation investment, and the 22nd state since 2013.

Visit TIAC’s South Carolina page to follow the progression of this bill, and to see past attempts to raise the state gas tax in South Carolina.