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State tax updates for New Hampshire, Pennsylvania,
Illinois and South Carolina
By Kay Bell • Bankrate.com
New Hampshire's state property
tax system is "constitutionally flawed," but state residents shouldn't
start spending any tax savings yet.
On Jan. 17 a New Hampshire
Superior Court judge abolished the property tax system and ordered
the state to repay all the money -- an estimated $900 million --
it had collected since the collection method went into effect in
1999. Gov. Jean Shaheen, however, called the court order "ridiculous"
and has vowed to fight it through the appellate system. No reimbursements
will be issued until the case is final.
The property tax method in
question was devised as a way to get money for schools without resorting
to a sales or income tax, both of which are nonexistent in the Granite
State. Under the system, a statewide property tax was initiated
and included 53 ''donor towns,'' wealthier jurisdictions that have
paid more into the system than they've received. The tax pays more
than half the state's education costs under a temporary funding
plan set to expire in January 2003.
While the tax rate of $6.60
per $1,000 in assessed property value is uniform, tax opponents
argued the system was unfair because local assessors use different
methods to value properties. The court agreed, adding that because
New Hampshire does not enforce a section of the state constitution
requiring revaluations every five years, some towns have not revalued
their property in decades.
In striking down the tax,
Judge Richard Galway said that by not having set criteria for adjusting
property assessments, property values vary widely. This means some
residents of some towns are overcharged, while others are undercharged.
If New Hampshire is going to have a statewide system of collecting
taxes, he said, it must have a statewide system of assessing property.
Shaheen is expected to continue
to support the statewide property tax system when she offers her
budget on Feb. 15. However, state officials say the governor's budget
will be accompanied by corrective legislation beefing up the way
property across the state is valued by the state revenue agency.
"While we recognize the need
for improvements in our property tax system," Shaheen said, "Judge
Galway issued a decision that is impossible to comply with and inequitable,
providing a windfall benefit to people that have already received
the benefit of the services paid for with the statewide property
tax."
Pennsylvanians
get tax installment option
Worries about how to pay big tax bills may be a thing of the past
for some Keystone State taxpayers.
Under a new state law, any
local taxing district in Pennsylvania can give taxpayers the option
to pay their taxes in up to four installments throughout the year.
The decision to make the change and just how many payments will
be accepted is left to the local tax officials.
There is a downside for drawn-out
payments, however. Under the amendment to Pennsylvania's local tax
collection law, no abatement or discount is allowed when taxes are
paid in installments. Delinquent installments are subject to a penalty
of up to 10 percent.
Illinois
officials putting the word out on new tax credit
Illinois state and city officials have kicked off a public awareness
campaign encouraging eligible taxpayers to take advantage of the
new state earned income tax credit, along with the federal tax break.
Enacted last year and based
on the federal
program, the companion Illinois credit lets low-income workers
get back some or all of the state income tax they paid throughout
the year. Tax officials say qualifying Illinois families could get
as much as $3,888 in relief from the federal tax credit program
and as much as $194 in tax relief under the state tax credit. The
new state earned income credit was part of a $350 million tax relief
package passed by the Illinois General Assembly last year.
Because this tax-filing season
is the first that the state's credit is available, officials fear
that many eligible taxpayers may overlook it. To prevent that oversight,
major Illinois employers have agreed to place information about
the credit on pay stubs and in company newsletters. Utilities and
financial institutions will include information on the credit in
bill inserts and grocery chains will have notifications on grocery
bags.
Details on the credit and
a taxpayer worksheet are available in the Illinois individual income
tax return Form IL-1040 instruction book. Check out Bankrate's tax
profile for Illinois for a link to state tax forms.
Lower
South Carolina grocery bills
When the new year rolled around, taxes on many foods were rolled
back.
The sales tax rate on the
price of certain food items now is 4 percent, down 1 percentage
point. The tax rate is even lower for elderly South Carolina shoppers.
Sales of food items to purchasers aged 85 or older are now taxed
at a 3 percent state rate. Any local taxes, however, still apply
for shoppers of any age.
According to the South Carolina
Department of Revenue, the lower food tax applies to:
- Any food item intended
to be eaten at home, including snacks, beverages and seasonings.
- Cold, prepared items
such as salads or sandwiches intended to be eaten at home.
- Seeds and plants intended
to grow food, but not flowers or birdseed.
Grocery items that are still
taxed at the state's 5 percent rate include:
- Tobacco
- Alcoholic beverages
- Hot foods ready to eat
- Hot or cold food to be
eaten at a lunch counter, in a dining area or anywhere else in
the store.
- Non-prescription vitamins
and medicines.
- Pet food
- Any non-food item such
as toilet paper, soap or other household goods.
- Hot beverages such as
coffee.
State tax officials note
that if the General Assembly provides future funds, the state tax
rate on eligible food items will continue to be reduced annually
until it is eliminated.
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