Local News

Sales Tax Issue Remains Hot Topic In State House

Posted July 18, 2002

— State lawmakers are tackling taxes and picking sides. The issue is whether counties should be allowed to raise the sales tax.

Representatives from cities and counties across the state appeared at the state House Wednesday to show their support for preserving local revenues.

House lawmakers are debating whether to give local governments the option of raising the sales tax another half-cent starting in September. The sales tax money would replace money Gov. Mike Easley seized in local reimbursements for the past two years. As a result, some towns like Zebulon in Wake County had no option but to raise property taxes.

"We were forced to raise taxes 2 cents, implement a garbage collection fee this year in order to raise a couple hundred-thousand dollars. It does not look better for next year," town manager Rick Hardin said.

On Wednesday, the House floor debate on the measure quickly turned to a fight over increasing the sales tax rate to 7 percent.

Right now, North Carolina has the 16th highest sales tax in the country. Across the border in Tennessee, lawmakers just raised their sales tax from 6 percent to 7 percent to deal with a similar budget crisis. Tennessee does not have a state income tax.

In Virginia, the sales tax is 4.5 percent. Local governments get 1 percent and the rest goes to the state. South Carolina works almost the same way with a 5 percent sales tax. Counties there can also collect an additional 1 percent if voters approve it. In Washington, D.C., the sales tax is 5.75 percent.

Oregon, New Hampshire, Deleware and Montana are the only states that do not have a sales tax.

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