Adding a sales tax to transactions that are not currently taxed always draws fire whenever it is proposed despite the fact that that broadening the the sales tax base has been a recommendation of every bi-partisan study commission since the stone age. The tax plan included in the House budget proposal would broaden the sales tax base to digital downloads and repairs, warranties and installations associated with tangible property (auto repairs, AC installations, etc.). Opponents of broadening the sales tax base to include such things usually claim that it’s unfair to the businesses that will have to collect this tax. Hundreds of thousands of retailers have been asked to collect sales tax from customers since the sales tax was established in the early 20th century and it’s unfair to those businesses not to require others to do so as well. Moreover, collecting the tax is not the same thing as paying it – consumers pay it and that’s as it should be.
Opponents of taxing these types of servics also claim that doing so puts businesses in NC at a competitive disadvantage. Actually, what the House is proposing is common in other states. In fact, 21 states, including 4 in the south, already tax auto repairs and 24 states currently tax repairs to personal property, including 5 in the south. And at least 15 states already tax digital downloads. Say what you will about this aspect of the House tax package, but it is not unfair and it is not uncommon.