Sonoco seeks local support on taxation issue

DARLINGTON — Sonoco on Monday asked Darlington County Council and the governing councils of the county’s four municipalities to support its efforts to enact a change in a state law that will allow its headquarters office building in Hartsville to be taxed at the state’s commercial rate of 6 percent rather than at the industrial rate of 10.5 percent.

Without the change, said Roger Schrum, vice president for investor relations and corporate affairs for Sonoco, the global packaging company that is headquartered in Hartsville may be unable to expand operations in Hartsville in the future. Schrum spoke at the quarterly joint meeting of the county council, the municipal councils of Hartsville, Darlington, Lamar and Society Hill and the Darlington County Board of Education.

In June, the S.C. Supreme Court ruled against Sonoco in a case involving the taxes paid on two of the company’s properties in Hartsville, Sonoco’s Hartsville headquarters office building and order fulfillment center and its Hartsville manufacturing plant. The court rejected Sonoco’s 1997 claim that the office facility and order fulfillment center should be taxed at the state’s lower 6 percent commercial rate rather than the 10.5 percent industrial tax rate because, it said, the two properties are contiguous to each other.

Sonoco says the properties are not contiguous and operate independently with separate and distinct functions. Schrum said the two properties are even separated by a public access road.

“We believe these are separate facilities,” he said.

“We’re concerned that the ruling will prohibit us from growing our operations in Hartsville,” Schrum said.

Schrum said if the ruling stands it will cost Sonoco about $150,000 a year more in taxes paid to the state and said that would lessen any incentive to expand in Hartsville.

“We certainly don’t want to do anything in the county that doesn’t have the support of the community,” Schrum said. “We’re asking for your support. We want to expand here in Darling-ton County. We just want to be in a position so that we can expand.”

County councilwoman Anne Warr of Lamar said she would support a resolution from county council endorsing Sonoco’s efforts to get the law changed.

The company has also gained the support of the members of Darlington County’s legislative delegation in its efforts, Schrum said.

A $4.04 billion global packaging company, Sonoco employs 18,600 people worldwide at its 334 plants in 35 countries with an annual global payroll of $540 million. The company sells products in 85 countries.

In Darlington County, Sonoco employs 1,600 full-time employees, 67 percent of whom live in the county, with 746 retirees from its Darlington County operations, 80 percent of whom live in the county. Total salary and benefits paid to employees and retirees in Darlington County comes to $95 million, Schrum said.

He also pointed to Sonoco’s economic impact on Darlington County, where the company’s total direct operating costs come to $689.1 million annually. That includes $3.5 million paid in taxes in Darlington County, $285 million in value of products manufactured in Hartsville, $378.5 million spent on suppliers and services in the county, $21 million in annual utility bills (including water, sewer and energy), and $1.1 million in 2008 contributions to Pee Dee community organizations — much of it toward education.

Schrum said that for every dollar spent by Sonoco in Darlington County $1 is indirectly spent into the county’s economy, bringing the company’s total direct and indirect economic impact on the county to $1.385 billion a year.

Schrum said Sonoco officials have talked with officials from the S.C. Department of Revenue about changing the language of the law to allow the headquarters building and order fulfillment center to be taxed at the lower 6 percent rate.

He said it appears that Sonoco is the only company in South Carolina facing such a situation and said the company believes the ruling is unfair to the company, penalizing it over other corporations in the state.

He said revenue department officials agreed that the current situation is unfair to Sonoco and had indicated that they would support a change in the law.