Local News

House Committee Continues To Debate Proposed Tax Plan

Posted July 25, 2001

— How much will you have to pay to help the state out of its budget crisis? A House committee is debating a plan to raise the local sales tax combined with some tax cuts and loophole closings.

It was standing room only at the state legislative building as the House Democrats' tax package got its first hearing. Those who would feel the effects of tax loophole closings, including a premium tax on HMOs spoke out at the hearing.

"Specifically, it's also going to tax the most affordable option out there for people," says Paul Mahoney of the N.C. Association of Health Plans. "As our economy goes into tougher times and people's wages may not be rising, premium payments are going up considerably. Here, you have something that is going to add to the problem for a lot of people."

A six percent tax on hard liquor was opposed by the liquor industry. Republicans argued against the half-cent sales tax for counties. A Republican amendment that would force a referendum on the option was narrowly defeated.

House Democrats are touting the tax package as the only way to plug a huge hole in the budget and preserve the state's AAA credit rating.

"We have cut approximately $800 million a year out of the continuation budget," says Rep. Phil Baddour (D-Wayne). "There are other cuts that we can do, and we'll look at those, but we can't cut our way out of this problem."

The Republicans have proposed a dozen amendments to the tax plan, but all of them have failed on a 13 to 18 vote -- a five-vote margin. Democrats face an even slimmer margin when the tax package is debated by the full house, possibly as early as Thursday.

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