Local News

Sales Tax Break May Be In State's Future

Posted May 10, 2006

— State lawmakers are considering a potential sales tax break, but the question is how far will the idea go?

Gov. Mike Easley spoke about the idea during Tuesday's budget press conference. He called for a quarter-cent reduction in the state's sales tax, which would equate to about $40 a year for the average family.

Elaine Mejia of the North Carolina Budget and Tax Center said that the healthy surplus could be a big help for struggling families.

"We know that people whose incomes have really been stagnating in this state are average working families," said Mejia. "So, it's good that any tax relief is going to target them ... It's always a good thing in an election year when you can tax less, spend more and save more at the same time."

When House Democrats spoke about their agenda, they did not mention anything about a sales tax reduction. House Speaker Jim Black said he would not commit to anything, but at this point, everything is on the table.

"I don't think either caucus has a majority to decide what we are going to be doing with tax cuts," he said. "There will be some across-the-aisle discussion about that, and there is a possibility that we are going to do some tax-cutting."

Republicans have said there was supposed to be a temporary sales tax increase from 2001 and now five years later, it is still in place. They are calling for a half-cent reduction in addition to other tax reductions.

"We've got a $2 billion surplus this time, and I think one of the first things we need to do is give some of that money back to the people," said Senate Minority Leader Phil Berger.

Other bills are under consideration at the General Assembly, including one that would create a constitutional amendment that would force proceeds from the state lottery to go directly to education. As the law stands right now, there are loopholes that state those proceeds could be used elsewhere.

Another bill would change the funding formula, where larger school districts would get more money from lottery proceeds.

There is also legislation to repeal a law supported by House Speaker Jim Black that requires students entering kindergarten receive mandatory eye exams. Also, legislation for a video poker ban is on its way to the Senate Thursday.

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