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House Committee Passes Sales Tax Bill

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RALEIGH, N.C. — The new sales tax package that was passed by a House committee Wednesday could help give a boost to resolving a budget impasse.

In what lawmakers are calling a sales tax swap, shoppers will not notice the difference at the cash register. The half-cent sales tax they have been paying for a year would go to local governments instead of the state treasury.

"It allows counties to raise the sales tax by a half-cent on January 1, but a state half-cent sales tax comes off December 31, so there is no net increase in the state sales tax," said Rep. Paul Luebke, D-Durham County.

Under this new plan, consumers who are now paying between 6.5 percent to 7 percent in state and local sales taxes will not see an increase. However, this plan would not go into effect until January 1, 2003, which means it will be awhile before local governments see money in extra sales tax revenue.

"It's a swap of $333 million that we are losing for about $157 million of new revenue that will be picked up, so we are losing about half the money," said Ellis Hankins of the League of Municipalities.

Rep. Russell Capps, R-Wake County, said he wants the state to pay local governments the money back.

"It's not the counties' fault that we are in the mess we are in here in the state. The governor confiscated their money," he said. "We call it thievery really because he took the money that belong to the counties, so the honorable thing for us to do is give the counties their money then solve the budget problems in other ways."

The House will debate the sales tax issue on Thursday.


Fred Taylor, Reporter
John Cox, Photographer
Kamal Wallace, Web Editor

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