Local Politics

After 0-for-20 on land tax, counties eye local sales tax

Posted May 7, 2008

— As a controversial proposed tax on real estate sales continues to get pounded at the polls across the state, officials in some counties are looking at asking voters to OK a local sales tax add-on to generate extra revenue.

The land-transfer tax would add 0.4 percent to the sales price of every home or piece of land. State lawmakers approved the tax and a quarter-cent local sales tax as two options for counties to raise money to deal with growth-related needs, such as new schools, more roads or expanded water and sewer lines.

They made implementation subject to voter approval, however, and that is clearly not happening with the transfer tax.

Many observers looked at historically tax-friendly Orange County as the best chance to pass the transfer tax. Voters there defeated the proposal Tuesday by almost a 2-1 margin, however.

Voters in three other counties also rejected the transfer tax Tuesday, stretching the idea's losing streak to 20 out of 20. The tax also lost in all 16 counties that put it on the ballot last November.

"I think they got the message," said Ben Lloyd, an Orange County farmer who opposed the transfer tax. "It is not fair to have a small segment of people have to pay the bills."

Orange County Board of Commissioners Chairman Barry Jacobs blamed the powerful real estate lobby for killing the transfer tax.

"Nobody likes to lose, and nobody likes to lose to a bully," Jacobs said.

County officials saw the transfer tax as the best way to protect one of the county's top assets: its public schools. The county has built nine schools in the county school district and the Chapel Hill Carrboro City Schools district in the past decade, relying on property taxes and bonds to pay for them.

"(The property tax rate) goes up faster and higher than any of us as elected officials or taxpayers would like," Jacobs said.

Commissioners must now consider alternatives like a local sales tax to fund schools and parks, he said.

"I'm a firm believer in sharing both the wealth and the burden. The fairest tax there is today is a sales tax." Lloyd said.

Twenty counties had sales-tax referenda on the ballot Tuesday. Voters in 18 counties defeated their measures, while those in Cumberland and Haywood counties approved the tax.

Orange County officials spent $100,000 on an educational program to inform voters about the transfer tax and the need for revenue to help pay for growth.

"They were going to educate us. So, I guess they did educate us. (Tuesday) night, they got educated," Lloyd said.


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  • WXYZ May 9, 2008

    This is a very good reason we should all be very, very grateful that we have the right to vote.

  • magicbus May 8, 2008

    chfdcpt.....again you need to check your facts.

    The seller is the one that is responsible for paying this tax...not the buyer. Therefore this tax applies to anyone SELLING a home...not buying. And apparently it isn't obvious, because it is set up so the seller pays the transfer fee. If it was the other way around this would make sense and they wouldn't be having such a hard time passing the tax.

    Charging more to the buyer so that the seller can pay for it is not the same as making the buyer pay for it.

    When you go buy a car you negotiate a deal and then the dealer tells you what the taxes and tags are. If the dealer wants to negotiate the price down so you can afford the taxes that is the dealer's option. The dealer doesn't say the deal is "this" and I'll pay the taxes.

    If they want to approve this tax they need to make the buyers responsible for it and make it part of closing costs.

  • chfdcpt May 8, 2008

    Magicbus, if you read my last post right, I said that the trasfer fee applies to anyone buying a home. So obviously, the buyer will pay the transfer tax, since he has to pay it before the property is transfered to him. It is not the seller that pays it, it is the buyer. The same way that when you buy whatever at the store, the store collects the taxes and turns it over to the state/county. Once you make the sale of the property, you then must pay the transfer tax, which you should charge the buyer of the home for.

  • bs101fly May 8, 2008

    let's put one in the loss column for the wake county school board with their next bond. Oh it's coming, and YOUR money is needed badly to be misused!


  • Metsfan May 8, 2008

    Why are tax increases the only solution politicians seem to have for every problem?

  • methinkthis May 8, 2008

    The whole tax system is in great need of being totally replaced. Instead of a myriad of fees and taxes that require a high bureaucratic structure to administer and a great complexity of forms, all property and income taxes should be scrapped and replaced with a single 'sales' or consumption tax. Why have we allowed ourselves to be forced into an income tax structure that is so complicated that the experts get it wrong sometimes. Why should we have a tax structure that requires expensive software or a CPA for a typical middle class homeowner who gives contributions and has small investments to be able to file his taxes? A tax on consumption is the fairest way. No limits on the value. You want a $125K car you pay tax on the full amount. Then every taxpayer will be aware of what they are paying every time they shop and, perhaps, then will be more aware of what our legislators are doing to us when they spend it frivolously on tea pot museums and roads to nowhere.

  • room May 8, 2008

    Didn't school bonds pass a couple of times over the past few years? That money is gone already? To bad the elected only know tax and spend and have never heard of cutting waste.

  • Its me again May 8, 2008

    Taxes are now based on a percentage of total sales,income,etc.So with inflation and wage increases tax revenue will increase as a result.Keep voting any tax increase down, and vote out anyone who supports an increase.NO TAX INCREASE!!!!!!!

  • fishie May 8, 2008

    I should have said "would not have applied" since it was defeated...my bad

  • fishie May 8, 2008

    Admiral - Sorry to point it out, but you are mistaken (at least for Chatham Co - I don't know about the other counties). The tax does not apply to inherited land, foreclosures, or mandantory land transfers (whatever that is). Also, your math was wrong. 0.4% on a $500,000 home is $2,000.