State eyes services for sales tax

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State eyes services for sales tax

Published: Saturday, August 3rd, 2013 @ 9:07 am
By: Jeff Aydelette ( More Entries )

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    Publisher's Note: This article, by Jeff Aydelette of the County Compass, originally appeared in the Beaufort Observer.

    Legislating can be messy. Sort of like making sausage. Things often get thrown in at the last minute. And, there's no better way to find obscure, and potentially hot topic stuff, than in the final section of a new law. With his signature Tuesday, Gov. Pat McCrory officially codified new legislation that has a warm fuzzy name - the Tax Simplification and Reduction Act.

    We thought you might like to peruse the very last words of this new law. Pay particular attention to Item 7. That's the seed that could quite quickly grow into a new sales tax on a multitude of services - things like hair styling, dry cleaning, chiropractic treatments, even baby-sitting.

    Legal advice is also a service that could possibly be taxed, but don't look for that to happen. There are too many lawyer-legislators in the North Carolina General Assembly who would squawk:

    The Revenue Laws Study Committee is directed to study the tax issues listed in this subsection. The Committee may report its findings, together with any recommended legislation, to the 2014 Regular Session of the 2013 General Assembly upon its convening.

The scope and application of the privilege tax at the rate of one percent (1%) with a cap of eighty dollars ($80.00) that applies to mill machinery and on other machinery and equipment purchased by certain industries and companies.

The feasibility of a preferential tax rate on diesel fuel sold to railroads, fuel sold to passenger air carriers, and fuel sold to motorsports.

The authority of cities and counties to impose a privilege tax on businesses and the various State privilege license taxes.

The impact of the elimination of the State and local sales and use tax refund on nonprofit entities and their ability to fulfill their stated mission.

The benefits and fiscal impact of allowing corporations to deduct net operating losses as opposed to net economic losses.

The simplification of the franchise tax base calculation and the elimination of the franchise tax.

The feasibility of expanding the sales tax base to include additional services.

The application of the corporate income tax rate reduction trigger formula.

The low-income housing tax credit.

10. The distribution of the sales tax collected on electricity and piped natural gas to cities.

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Comments

Stan Deatherage said:

( August 3rd, 2013 @ 10:25 am )

The whole sales tax conundrum over an income tax is on unproven ground here in North Carolina.

I have two problems with this sales tax endeavor:

1. From my personal perspective, I run a purely services business. Every time we walk into another's business, there is nothing that we can't do for them that is web services oriented, including some innovative services that no one else can currently do ... so am I expected to become a tax collector.

Furthermore, if I don't want to be a tax collector, what's to keep me from bartering some of my services. There is this innovative stuff we can do for folks that cannot be detected by the untrained eye.

Now, what would the tax hounds do, create a new bureaucracy that has bureaucrats that are trained to discover the subtleties of barter.

2. As a long time County Commissioner, I am well versed in this one truth: Don't give politicians yet another way to collect and give away other people's money.

Chris Weaver said:

( August 3rd, 2013 @ 9:48 am )

These are included in the new law? or "The Revenue Laws Study Committee is directed to study the tax issues listed in this subsection"

The authority of cities and counties to impose a privilege tax on businesses and the various State privilege license taxes.

The authority of cities and counties to impose a privilege tax on businesses and the various State privilege license taxes.

#3 in the hand of Orange County... is concern enough for me to put out a for sale sign(as if there were not enough already).

#7 leaves the door open...I suppose this is is to be used as an rounding error should the forecast uptick does not proceed as planned, but leaving a door open is never a good idea when so many are asleep and hardly stir as new taxes come in.

cw