Local Politics

Lawmakers tussle over taxes

Posted June 18, 2009

State budget
Map Marker  Find News Near Me

— Senate budget negotiators on Thursday rolled out a plan to raise an extra $950 million in revenue in the coming fiscal year through a combination of new taxes on services and lower income and sales tax rates.

Meanwhile, House leaders contend their plan to raise income and sales taxes would be better for the state.

Car repair generic, mechanic Tax proposals abound in legislature

Gov. Beverly Perdue called on lawmakers Wednesday to raise an additional $1 billion to $1.5 billion to avoid drastic cuts to North Carolina's public schools, community colleges and universities.

Lawmakers have spent weeks slashing spending to erase a projected $4.6 billion deficit in the 2009-10 fiscal year, which starts in July. Now, they're tussling over the revenue side of the balanced budget equation.

After meeting with Perdue, House and Senate leaders agreed to aim for about $1 billion in new revenue in 2009-10 and $1.3 billion in the second year of the two-year budget cycle.

The budget passed last week by the House raised taxes by $784 million, primarily through a quarter-cent increase to the state sales tax and higher income taxes on couples earning more than $200,000 a year.

House Majority Leader Hugh Holliman said Thursday his chamber could add taxes on some services and easily reach target of $1 billion in new revenue.

"People making over $200,000 a year, over $500,000 a year can afford to help during a time as desperate as we are now," said Holliman, D-Davidson.

Senate Democratic leaders said they won't support higher sales or income taxes in a down economy, so they have hammered out an alternative plan.

Under the Senate proposal, sales taxes would be applied to 55 services that haven't previously been taxed. The list, which hasn't been finalized, includes vehicle repairs, lawn care, home renovations, painting, manicures and extended warranties.

"Down the road, North Carolina has got to modernize our tax policy. This is a great start and a great time to do it," Senate Finance Committee Co-Chairman David Hoyle said, noting the state is moving toward a service economy from a manufacturing one.

The Senate would offset the new taxes by lowering the state portion of the sales tax from 4.5 to 3.75 percent and lowering the tax brackets for individual and corporate income taxes. The three individual rates would drop from 6, 7 and 7.75 percent to 5.25, 6.5 and 7.5 percent.

"Some people would pay less taxes under our plan, depending on the range of services that you might use. Some might pay marginally more," said Hoyle, D-Gaston, predicting that the plan would raise the overall tax bill for the average North Carolina resident by less than $100 a year.

"We have to have some revenue. If not, we're going to have to shut the state down. I don't think any responsible citizen wants that to occur," he said. "We were talking with the governor (Wednesday), and she's worried about paying the light bill come January or February. Our cash flows are falling. Our reserves are nowhere. What if we have a hurricane? What if we have a major natural disaster somewhere?"

The Senate plan also would raise taxes on cigarettes by 15 cents a pack and on alcohol by varying amounts. House leaders have opposed such "sin taxes."

"We want to be open-minded," Holliman said. "We want to sit down with the Senate as we have already and start going through (the two plans) item by item. We certainly think our plan has good points, too."

Hoyle said it's a bad time to look at raising income and sales taxes, as House members propose.

"I think it does irreparable damage to the state and at a time we're trying to bring jobs here and we're trying to recruit industry and businesses," he said.

Senate leaders said their tax plan will likely evolve over the coming days – they declined to provide the full list of services they would like to tax – and they hope to present it to various committees next week.

159 Comments

This story is closed for comments.

Oldest First
View all
  • Independent Mind Jun 19, 2009

    chfdcpt- Have you ever heard of a temporary tax? No. All taxes are permanent.

    Cut entitlements. All of them

  • vote4changeASAP Jun 19, 2009

    Unemployment rises to 11.1% and the state and federal government plans to impose more taxes on small and corporate businesses and deduct more money out of your paycheck for Medicare to pay for their health plan.

    Expect unemployment to keep rising.

  • ObamaMustGo aka NCcarguy Jun 19, 2009

    yet unemployement keeps rising!

  • whatusay Jun 19, 2009

    The democrats feel the illegals are their security for being re-elected. That is why you never hear a democrate talk about making them pay taxes,stop the welfare to them, or even acknowledge they are a problem and drain on tax payers.

  • PeaceOut2017 Jun 19, 2009

    "I think it does irreparable damage to the state and at a time we're trying to bring jobs here and we're trying to recruit industry and businesses," he said."

    Face it, you're not going to bring jobs, industry, and businesses here. Too many taxes. Only jobs that will be brought here is those for illegal immigrants since the democrats dont want to control the border because they might lose the illegal votes in the next election

  • bnorris6 Jun 19, 2009

    For those who do not believe illegals have not been a drain on our system, please get a clue. We have to build more schools to accommodate this illegal children, who their parents do not pay taxes, claim and if they do claim so many dependents that no taxes are withheld, they send money back home, They do receive free healthcare, WIC and food stamps, and if you do not believe that their have been a drained on our society, then you have no clue, so please get one. Government can do with less like the rest, but that might entail cutting pet programs. Government is not to be all to all people, no free handouts for those who are illegal in this state, for those too lazy to work, but would rather just have babies so they collect welfare, sure most have several children with each having a different daddy..If receiptants of welfare programs claim they can not find work put them to work for the state picking up litter, clean up public parks, something..but no more free rides!

  • whatusay Jun 19, 2009

    Our lawmakers refuse to go after the illegals who do not pay state taxes, but they don't even file a NC tax return. Why do tax payers have to support the politicians and the illegals?

  • Z Man Jun 19, 2009

    Ksw1 - that is the issue. There are those that bust their tail trying to get ahead and there's those that are leaches on society. I'm afraid those leaches on society are winning at this point.

    I told my son (facetiously) that there's no reason to go to college. Better to go on welfare and let others take care of you. That seems to be life's plan for many these days.

  • CestLaVie Jun 19, 2009

    Pack: SOME Americans.

    It doesn't make sense to raise some taxes and lower others. Is that like Bev's furlough time (i.e. forced time off with pay) due to state employees'.5% pay cut?? Give some; take some?

    Are all of you in the legislature really thinking about these tax issues? You want to raise sales taxes on services (MOST of which MOST taxpayers can & will live without, so how much will your projections be off there...and how many providing services will find a way to avoid charging & paying the tax?); and raise income taxes (when more & more taxpayers are without jobs or have lowered salaries or employers have cut back on hours, just how lucrative in revenue will that be for you?)?

    The poster who said to eliminate yours & the gov's salaries was right on.....because none of you REALLY need the money, nor have a clue about those you SERVE! It seems like the shoe's always on the other foot.

  • Bendal1 Jun 19, 2009

    "If the legislators and governor would just pay attention to what the AMERICAN taxpayers want, we wouldn't be in this fiscal mess."

    HAHAHAHAHAHAHAHAHAHA!!! That's hilarious; do you think the legislators are spending money on anything not "wanted" by the taxpayers? Oh, you even capitalized "AMERICAN" like that makes a difference. Tell me, do you truly think our $4.8 billion deficit is solely due to illegal immigrants?

    The kneejerk reactions from some here every time money gets mentioned is so predictable. It's always those "illegal immigrants" causing our state's problems, ignoring that we've got one of the fastest growing populations of legal citizens in the country, but still have a rural mindset in much of the state.

    They're planning on cutting $3.8 billion and raising $1 billion in tax increases. As a taxpayer that sounds fair to me, especially if they cut income and sales taxes in the process.

More...