Raleigh, N.C. — It wasn't quite a dunking booth, but enough urban lawmakers and tax reform advocates took aim Tuesday at a proposed tax loophole for county agricultural fairs to soak the idea on the House floor.
The House voted 60-57 to defeat the bill, which would have exempted fairs from collecting sales tax on tickets for entertainment events.
Sponsor Rep. Bryan Holloway, R-Stokes, said the civic groups that run local fairs barely cover their costs, and sales tax could cut into revenue enough to force some fairs to close.
Other rural lawmakers from both sides of the aisle noted the important role fairs play in the life of small communities and the opportunity they provide for children to learn about farm life.
Rep. Charles Jeter, R-Mecklenburg, countered that any fair that could be undone by a small surcharge on tickets obviously was in bad financial shape to begin with.
Lawmakers "have to honor the tax policy we adopted," Jeter said, referring to a sweeping tax reform measure passed last year.
"This is the first string that starts the unraveling of that bill," said Rep. Julia Howard, R-Davie. "If you want to keep the tax reform package in place, you cannot begin to unravel it."
Rep. Becky Carney, D-Mecklenburg, said last week during another floor debate on the bill that she wanted to exempt other nonprofits from collecting sales tax, but she decided to wait until next year to seek such legislation in order to keep the conversation about the "tentacles of policies we pass and their impact on communities" going.
Holloway predicted other lawmakers would seek exemptions for special interests as well.
Rep. Edgar Starnes, R-Caldwell, said the state cannot afford a case of "buyer's remorse" on the tax package and needs to stick with the principle of a simplified tax code.
"We love to be able to give everybody a tax break or a tax credit or a tax incentive, but at some point, we have to pay for it," Starnes said. "We'll never be able to live within our means if we take things off the table."