Speak out on tax issues before it is too late

Jun 20, 2013

As discussions about tax reform proceed at a breakneck pace in Raleigh, it’s clear there are many strong ideas about the issue. The Senate is on its fifth version now, indicating just how controversial the issue is. Clearly, it is one that requires careful thought, not knee-jerk reactions.

A recent version of the Senate tax bill included provisions that are particularly insidious in that they represent a tax shift from state government to local government. Legislators have proposed eliminating the decades-old sales tax on food items that is channeled directly to cities and counties across the state. If the 2 percent sales tax on food is removed, and if local government entities are required to pay sales tax on their purchases, it would result in a significant reduction of revenue to use locally.

For instance, Haywood County’s loss is calculated at $1.5 million from this action, an amount that would require county commissioners to reduce services or raise property taxes by 2 cents for every $100 of value.

The loss for towns is projected to be higher, because in addition to the extra costs on purchases and sales tax reductions, towns will no longer be able to collect business privilege license fees.

Following the 2008 downturn, local governments cut back drastically and say there are no areas left to trim. Waynesville and Canton would be looking at a tax hike of more than 4 cents per $100 of value to make up for the revenue loss if the Senate provisions are passed, while Clyde’s loss will be about 6 cents per $100 of value and Maggie’s is slightly less than 2 cents per $100 of value.

As local leaders point out, most of the services being provided through the towns and cities are “mandated” and must be funded by state law. The services considered “discretionary” are the very things that make life in our community enjoyable, things like recreation or libraries.

If put in the position of losing a revenue stream, local commissioners and boards of aldermen would have to make the choice of raising property taxes or cutting out the very things that enhance our quality of life in a community.

Time is short to weigh in on an issue that will impact every individual in the state in multiple ways. The choices that have risen to the top in Raleigh include significant cuts to income and corporate taxes with higher sales taxes and government spending cuts making up for the reductions.

Legislators have said they’d like to wrap up the session — along with the tax and budget bills — by the end of the month, which means time is short to speak out on this issue.