City sweepstakes tax illegal
Lumberton's tax on sweepstakes businesses was too high, the North Carolina Supreme Court has ruled.
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"While the decision to levy a privilege license tax is within the discretion of legislative entities, any tax so levied must be just and equitable," the court wrote.
In 2010, Lumberton's privilege license on sweepstakes operators was $12.50 per business. The city then changed it to $5,000 per business location, plus $2,500 per computer terminal within each business location.
"This change from a flat $12.50 to a $7,500 minimum imposes a 59,900% minimum increase per business location," the court wrote.
Calling the case "hardly nuanced," the court ruled that Lumberton had "transgressed the boundaries of permissible taxation and constituted an abuse of the city‘s tax-levying discretion."
It's unclear what the wider affect of the ruling might be.
The court takes note of the sweepstakes ban case in its ruling, suggesting that this taxation case may not be very relevant going forward, but ordered the lower courts to deal with the issue of whether taxes collected by Lumberton ought to be returned to the gaming companies.
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