North Carolina House approves new local tax option

(The Center Square) – The North Carolina House approved a bill Tuesday that gives counties the flexibility to increase local sales tax without raising the maximum tax rate.

House Bill 704 also places a cap on the total sales and use taxes that counties can levy and allows counties to specify on the ballot how they will spend the proposed sales tax.

The local sales and use tax rate in North Carolina counties ranges from 2% to 2.75%.

The measure would allow all counties to use a local-option quarter-cent sales tax usually set aside for transportation for other purposes. It would allow counties to increase the local-option tax from a quarter-cent to a half-cent.

“None of the 94 counties that are authorized to levy the quarter cents for public transportation do so now, and many would like to be able to levy the tax for another use,” said Rep. Julia Howard, R-Davie, who introduced the bill.

Voters must approve the tax through a ballot referendum before it can be adopted. HB 704 also authorizes counties to list their spending options on the ballot.

The North Carolina Association of County Commissioners said the change would increase transparency for taxpayers, but John Locke Foundation President Donald Bryson said it is “window-dressing” for transparency and “disingenuous.”

“They can’t earmark $3 million just for transportation to create a new bus line or something like that. They have to cover their other bills first, and then they might be able to buy more buses,” Bryson said. “The important thing to the taxpayer is are my taxes going up, period. And do I trust the county government or the municipality to be a good steward of my tax dollars.”

NCACC Director of Government Relations Amber Harris said counties use the tax to provide county services and programs and cover capital improvement projects.

“Counties need as many options as possible to provide a lot of state-mandated services, public health, school capital and social services, and we’re always looking for additional ways to provide the best service we can to residents across the state,” Harris said.

HB 704 also authorizes counties to levy any combination of local-option sales taxes at no more than 2.5% for the 94 counties and no more than 2.75% for Durham, Forsyth, Guilford, Mecklenburg, Orange and Wake counties.

The North Carolina Department of Revenue would retain $300,000 from the tax revenue to execute the change.

The House voted, 110-4, to approve HB 704 on Tuesday.

The House also approved House Bill 739, 108-2, on Monday. It makes changes to the state’s property tax appeals process.

The bill requires property owners to be physically present at the board of equalization and review hearings, while current law makes it optional. The property owner, however, could designate someone to act on their behalf.

HB 739 also eliminates one level of appeal. If a property owner agrees in writing to a board of equalization and review order changing a listing or appraisal, they would not be able to appeal that decision to the North Carolina’s Department of Revenue’s Property Tax Commission.

Both bills now head to the Senate for consideration.

Disclaimer: This content is distributed by The Center Square