Your oil change got a bit more expensive today. So too did a trip to the cobbler, the jewelry repair shop or to have viruses removed from your hard drive. Tuesday is the first day North Carolina starts collecting sales tax on these and other services. It’s either great for the state or horrible for its people depending on who’s speaking at the podium.
Expanding the sales tax base to include services was part of a grand bargain reached in the General Assembly last year. The original proposal was to change how sales taxes were divvied up by the state – it would have been an economic boon for rural counties but a major economic hit to cities. And lawmakers representing the latter helped shoot that plan down. A larger portion of this income will be sent to rural counties. That’s good news that also reflects the growth of services in the modern economy says Senator Bob Rucho.
"Everyone has to understand that there has been a significant change from when the sales tax started," said the Mecklenburg County Republican, "It’s gone to 70 percent services. You can't ignore that in an economy when you’re trying to get all 100 counties viable and healthy."
These new taxes amount to roughly 7 percent increase on the cost of these services, though that will vary depending on a county’s tax rate.
By definition, this is a regressive tax – easier for the wealthy to absorb than the poor. But Rucho took issue with that because it was part of a broad tax cut, he argued, that included raising the zero tax bracket to $15,000 for all North Carolinians. "Every North Carolina family in every income has seen their taxes go down."
"I’ve heard Senator Rucho say that," said Senator Mike Woodard, a Democrat. Speaking at the same podium just hours later, "For Most North Carolinians they’re going to need a magnifying glass to see the tax cuts Senator Rucho touts."
Woodard walked through what he believes is crystal clear, how broad the new taxes are. "Car repairs, plumbing services, floor installations, shoe repairs, car wash services, clothing alterations, even blade sharpening."
So whether this is great for North Carolina or bad for families depends on your political point of view, and what time you booked the press room.
