The practice of charging an occupational or business license tax in South Carolina predates the earliest municipal charters of the late 18th Century. As early as 1748, Governor James Glen exchanged by law his privilege to license taverns and inns to the Commons House in Charleston for £120, and regulations around licensing appear in Charleston’s Corporation Laws of 1783.
Although Spartanburg’s first charter was issued in 1831, we have not yet been able to access a copy. “An Act to Incorporate the City of Spartanburg,” which was approved December 24th, 1880, includes the power to grant licenses in Section 16, and the earliest City-published Business License Ordinance that includes specific classifications and rates that we’ve uncovered to date is from 1915. It includes classifications for Canvassers/Drummers, Dog and Pony Shows, Feather Renovators, Flying Jennies, Hacks, Hucksters, Organ Grinders, and Scalpers.
To get an idea of how the business license rates from the 1915 ordinance would translate to today, we consulted www.measuringworth.com. According to the site, which bases increases on the Consumer Price Index, the relative value of $1 in 1915 was $24.30 as of 2014. If business license taxes had kept pace with other cost of living increases, the base cost of these business licenses today would be:
|Class||License in 1915||Equivalent in 2012|
One significant change that has occurred since the tax’s inception is the State’s requirement that municipalities base the business license tax on gross income, as stated in Section 5-7-30. Tax-wise, this keeps small, local businesses and larger, multinational business on more equal footing.
Because the City of Spartanburg does not deal in utilities and does not charge a local option sales tax or transportation tax, the City generates the majority of the general fund revenue that supports operations and services (including police, fire, streets & sewers, solid waste, community development, and parks, recreation & special events) through property taxes and business license taxes.*
Without business license taxes, City property owners and residents would be supporting almost all of the cost of City operations and services, and the City would be overwhelmed with addressing the needs of the increased daytime population that commutes into the City for work, school, and recreation.
Charging a business license tax on both resident (located inside the City limits, pays a lower rate, and pays on all income) and non-resident (located outside of the City limits, pays a higher rate, and pays on income from work performed inside City limits only) businesses and occupations ensures that everyone who receives a direct financial benefit from working in the City and using City resources helps to support the City.
*For a more in-depth explanation of City revenue sources, see the City’s Comprehensive Annual Financial Report (CAFR) here.