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Services taxed in House plan commonly taxed elsewhere

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.

4 Comments


  1. IBXer

    June 15, 2009 at 11:29 am

    I don’t understand what all the fuss is about. I mean seriously, we are in a recession, which means people aren’t spending thier moola. So why not just raise taxes and let the government spend it on tea pot museums or whatever since the people are apparently unwilling to spend it on stuff they don’t really need anyway.

  2. Ray

    June 15, 2009 at 12:21 pm

    If you tax a man’s labor (auto repairs) and then tax his income too, that is wrong. Just because half the states do it doesn’t make it common practice. Half the states do not.

  3. Elaine Mejia

    June 15, 2009 at 12:28 pm

    Ok folks. Number one, the teapot museum money was years ago so please get current examples of waste if you want to have that debate. Number two, the person doing the labor will not be paying the tax, the person paying for the service will be paying the tax. That’s why it’s called the “retail sales tax.”

  4. Ray

    June 15, 2009 at 1:36 pm

    You also pay the mechanic’s income tax. There is no difference. It is all passed on to the consumer. You can’t make up an infinite number of taxes and say it’s okay because “he” is not paying the tax.

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