Lottery director says Sanfords plan would reduce funds for education

Gov. Mark Sanfords plan to charge sales tax on lottery tickets could cost South Carolina millions in lost education dollars, members of the S.C. lottery commission were told Tuesday.

Lottery director Ernie Passailaigue said Sanfords plan to apply the 5 percent sales tax to lottery tickets could cost the state anywhere from $36 million to $154 million in education funding.

Sanford wants to use the sales tax on lottery tickets, as well a 61-cent tax increase on a pack of cigarettes, to lower the states income tax. The income tax rate would decline from 7 percent to 5.9 percent.

But Passailaigue said Tuesday there are consequences to the proposal:

" The mega-jackpot game Powerball requires participating states to sell tickets at a set price of $1. If South Carolina imposes a 5-cent tax on a $1 ticket, making a Powerball ticket $1.05, the state would be in violation of Powerball rules and could have to withdraw from the game.

That would cost the state at least the $153.89 million a year in sales from Powerball tickets, he said. The state sold $724.31 million in tickets in the fiscal year that ended June 30.

" If the tax is included in the price of a $1 ticket, that would mean 5 percent less in lottery profits available for education. According to the state Board of Economic Advisers, applying the tax this way would raise $36.1 million in sales tax and would reduce net lottery proceeds by the same amount.