Senate gives tentative nod to tax changes

Posted May 28, 2014

— The state Senate voted 37-9 Wednesday to tentatively approve a package of adjustments to last year's sweeping tax reform measure. 

A final Senate vote is scheduled for Thursday. That would send it back to the House, where lawmakers say they have no major problems with changes wrought by the Senate. 

"We will vote to concur," said House Finance Committee Chairwoman Julia Howard, R-Davie.

If the measure gains final Senate approval early enough in the day Thursday, the House could hold a vote on concurrence that afternoon. 

Debate on the Senate floor Wednesday mainly revolved around how various provisions might affect the revenue collected by state and local governments.

One change that deals with the tax imposed on work performed by contractors that work through home improvement stores such as Lowe's or Home Depot carries with it some uncertainty. Tax analysts working for the legislature say they're not sure how a somewhat lower rate would affect state revenues.

"We have no idea what this is going to cost us," said Sen. Josh Stein, D-Wake.

While the change might be a good idea, Stein said, lawmakers should know what they're trading off. "There's a price at which this is a bad idea," he said.

But Republicans said the changes, even if they raise less money in the short term, could spur long-term economic growth.

"Some of us seem to be worried about how much revenue the state is going to lose," said Sen. Jerry Tillman, R-Randolph. "Some us are worried about how much it's costing taxpayers." 

Still top of mind for many Democrats were changes that will affect how cities and counties levy taxes on businesses. Those privilege license changes could cost cities $6.2 million for the year beginning July 1. The year after, privilege licenses would be eliminated if no further changes are made. 

Republican leaders, including Finance Committee Chairman Bill Rabon, R-Brunswick, committed to replacing that revenue for cities next year.

"We realize we are under the gun to fix this," Rabon said.

That said, he and other Republicans rejected an amendment offered by Sen. Joel Ford, D-Mecklenburg, that would have created a new privilege license system that would begin July 1, 2015. 

Absent some fix, Sen. Floyd McKissick, D-Durham, said that some small towns would be forced to institute double-digit property tax increases. 

"The only place these communities can go to is to increase their property taxes," McKissick said. 

But Sen. Tommy Tucker, R-Union, said that wasn't true. City governments, he said, had another choice even if they did lose the privilege license tax.

"If there is a loss of revenue, you have another choice beside raising taxes," Tucker said. "You could reduce your budget accordingly or not offer incentives to hotels or whatever else they do in Durham."


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  • miseem May 29, 2014

    Republican leaders, including Finance Committee Chairman Bill Rabon, R-Brunswick, committed to replacing that revenue for cities next year.

    That's the GOP answer to any and all complaints about their actions. "we are working on that" or "we will address those complications next year", figuring that the short attention span of the public will mean they never have to straighten out the mess they are creating. Or at least, someone else will have to. Repeal is their war cry. Fix, correct or replace immediately with a better law is not on their agenda. Of course, on a few of the laws they have enacted to fix non-existent problems, the cure is worse than the alleged disease.

  • aggie May 28, 2014

    Go to http://ballotpedia.org/Tommy_Tucker and you will see the donors. All businesses. He himself is a small business owner. Research where the money comes from and where it goes and you will see why Dems and Repubs act the way they do. The medium household income for Weddington (Tucker was on the Council) was $131,181 in 2011 against a state average of $43,916. I can't see him or any other member in the legislature being able to relate to the people who are really struggling when they don't know the true meaning of struggling. There is blame to go around for the way business being handled and for all the Tarheels that put them in the position to do it. Question is, will the people stop following what churches and friends say, study the candidates and vote accordingly. There are no perfect politicians. Be an informed voter and stop all the whining if you voted and your elected official is not doing what you thought or he/she said they would.

  • wth50beau May 28, 2014

    The privilege tax is a revenue source not a tax incentive. If the ability to levy it completely is denied towns across NC, they WILL have to raise property taxes, (including personal property taxes), to compensate. I know some towns abuse the right to levy the privilege tax in the amounts and ways they charge but a codification or renovation of the way and amounts allowed would fix the problem without shooting ourselves in the foot.

  • Benjamin Wright May 28, 2014
    user avatar

    So it's okay for state government to offer business's tax incentive but not okay for cities and towns?

  • wth50beau May 28, 2014

    How about SMALL town NC not Durham and Raleigh size towns. We are tightened to the bone and Just barely able to keep up with the labor and essentials. We are also trying to improve our infrastructure that was neglected during the HeyDay years of the 70's and eighties by that generation of leaders. The blow the legisature is proposing will cause an increase in property taxes because we have already pared down our "bloated" budgets to the point that there is no more fat.