Read my lips, MORE NEW TAXES ARE ON THE WAY FOR NORTH CAROLINIANS. This will be the latest reality if state Senate leaders get their way.
Members of the Senate Finance Committee met yesterday and discussed a bill that would make even more services subject to the sales tax. Senate Finance leaders claim that they are simply refining tax changes that have been passed in recent years, but this is not true. In spelling out various services that are subject to the sales tax, this bill adds a slew of new services that will result in North Carolinians paying at least $140 million in additional sales taxes, according to state officials. These spelled out services were not specified in the state budget passed last year that included expanding the sales tax base to more services.
Under the proposal, North Carolinians would now pay sales tax for house cleaning and janitorial services, landscaping services, gutter cleaning, window washing, furnace cleaning, pest control, and floor and carpet cleaning services, among other services.
Since 2013, services that have been made subject to the sales tax by state lawmakers are expected to result in North Carolinians paying nearly $640 million in additional sales taxes for the upcoming fiscal year that begins July 1st. The latest proposed sales tax changes would add at least an additional $140 million to this increase in sales taxes.
This development would effectively erase the proposal that has already been approved by the Senate and included in the House budget to increase the standard deduction in an effort to address the state’s upside-down tax system. At an estimated revenue loss of $200 million, policymakers have effectively swapped an income tax cut for more sales taxes. Such a move essentially wipes out any effort to lessen the tax load carried by low-and middle income taxpayers from an increase in the standard deduction. It also means a tax increase for the lowest income earners in the state, who don’t benefit from increasing the standard deduction because their income is so low.
As state leaders’ inconsistent brand of tax reform – which favors tax cuts for the wealthy and corporations – persists, everyday North Carolinians continue to bear the brunt of flawed tax policy. Costly tax cuts passed since 2013 will reduce revenue by more than $2 billion each year once all tax changes are fully in place. These are dollars that otherwise would have been available for our public schools, making higher education more affordable, and promoting healthy and safe communities.
Instead, in taxing these additional services and failing to reinstate the state EITC or maintain an income tax structure based on ability to pay, state leaders continue their steady march to further shift the tax load onto low- and middle-income tax payers. While hardworking North Carolina are on the job striving to make ends meet for their families, state leaders are working just as hard to create a tax system that ensures that economic mobility and opportunity remains a distant reality for millions of North Carolinians across the state.