Legislators talk taxes at chamber breakfast
By Steve Herring
Published in News on August 2, 2015 1:50 AM
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News-Argus/MELISSA KEY
State Reps. John Bell, left, and Rep. Jimmy Dixon, right, at Friday's legislative breakfast at the Lane Tree Golf Club
"We need to avoid all kinds of issues that create a urban-rural conflict," Dixon said. "When we talk about tax redistribution we need to be very careful. We do not want to get into a situation where we are having two North Carolinas."
If it comes down to raw numbers in a rural-urban battle, the rural areas will lose, he said.
The plan, that would bring in another $2 million to Wayne, is very enticing, he said.
"But we need to be very careful how we look at that," he said.
Several tables have been published on projected sales tax receipts should the state switch to the proposed per capita plan, Pate said.
In 2013-14, Wayne County received $17.4 million, Goldsboro $6.3 million and Mount Olive $600,000 in sales tax revenues, Pate said.
Under the plan going out four years, assuming 3.5 percent growth and steady inflation, Wayne County would get $22.6 million, Goldsboro $8.7 million, and Mount Olive $822,000, he said.
"That would be good news for the counties where most of the people who shop go elsewhere to shop," Pate said. "Merchants in that (shopping) county (now) keep the receipts. That is where the sales tax is collected and that is where it stays now.
"Sen. (Harry) Brown wants to see it distributed more evenly. I certainly support a plan like that."
There will be some counties that would lose such as the high-tourist counties along the coast and the larger urban counties where people go to shop, Pate said.
There have been disputes in the Senate on the massive expansion of sales tax on services, said Sen. Don Davis.
Davis said he has "tremendous concerns" about such expansion and that he wants to look deeper into the sales tax distribution plan.
"I think that the revenues that have come in in this most recent tax year proves the point that we are on the right track toward allocating taxes the way they should be," Pate said. "We are going to reduce the personal income tax rate, we already have.
"A trigger was set off with the most recent tax year in which the corporate rate is going to be further decreased this year. So I think we are doing some good things for business and the taxpayer."
Pate said he believes the House will join the Senate on the issue of spreading the sales tax responsibility across the board.
There also has been much talk about tax exemptions, Pate said. For example, senior citizens who count on an exemption for their medical care have to be taken care of "in a more fashionable way than we have done so far," he said.
Dixon said the Senate continues to promote continued tax code changes, while the House's position is stand at ease for a while and see how the revenue "settles in" before making more changes.
"The House budget this year allows for the full implementation of the tax changes that took place in 2013, which includes a $500 million reduction in the corporate tax," he said. "The significant change included in the House budget this year is that we restored the medical expense exemptions. We also maintained the allowances for charitable giving."
"We want to hold tight where we are at," said Rep. John Bell. "Let this thing work. It has done some wonderful things. You are looking at taking the state income tax from 7.75 percent and now it is 5.75 percent. You are looking at taking the corporate tax, 6.9 percent, to 5 percent."
Another area that helped was closing tax loopholes that will help reach the ultimate goal of getting the state income tax down to zero, Bell said.
It has to be a gradual process so as to not "shock" the system, he said.
The state's financial health has been improved by retiring a $2.8 billion unemployment insurance debt and by a drop in the unemployment rate, he said.
"We are moving in the right direction but we really need to stay where we are right now to see what is going to happen in the future," he said. "Sen. (Harry) Brown put forth a plan that I particularly like, but we need to go through all of the details."
Rep. Larry Bell said he favors the House spending plan as well.
"The only way that we have money in Raleigh is through the taxes that come from you," he said "I am for any kind of revenue that we can get to make sure that it is evenly spread for everybody. I don't see us taxing one group of people more than we do the other. As long as it is equally played across the board, I can support that.
"I don't want us to cut so many services that people suffer in the state of North Carolina, and sometimes we do that just to give tax breaks to people."