Republican Sales Tax Proposal Would Keep Wake County From Light Rail Plans, Democrats Say

Jul 23, 2014

A Senate committee is recommending a plan to limit the sales tax to 7.25 percent in most of North Carolina.
Credit MIKI Yoshito via Flickr

A state Senate committee is recommending a plan that would curtail the ability of four of North Carolina's most populous counties, including Wake, to raise their local sales tax.

Republican supporters of the bill say it's intended to create sales tax uniformity across the state and to give counties options on how to generate local revenues. But Democrats from Wake County say it would preclude them and three other mostly urban counties (Mecklenburg, Guilford and Forsyth), which have prior authorization from the General Assembly to tax higher than the rest of the state, from raising money for large transportation projects.

The bill would limit sales taxes in almost all of the state's 100 counties to 7.25 percent. Orange and Durham counties would be the only exceptions because voters there have already approved to raise the sales tax to 7.5 percent.

"We're committed to making sure that we're fair to everybody, fair to our rural counties," bill sponsor Sen. Rick Gunn (R-Alamance) told the Senate finance committee late Tuesday afternoon. "I think as we broaden this sales tax base over the next couple of years, it would be my hope at that point in time that all counties will prosper both large and small."

North Carolina's state sales tax is 4.75 percent, and most counties charge an additional 2 or 2.25 percent. Republican supporters of the new plan say they would be making it easier for those counties to charge an additional quarter- or half-percent for local schools, transportation costs or other expenses.

But Wake County Democrats say the bill unfairly targets them because county commissioners were already considering asking voters for a quarter-percent tax on the ballot in November, and the county is considering joining a regional light rail system project Orange and Durham, which would require an additional half-percent tax.

In Tuesday's finance committee hearing, Sen. Dan Blue (D-Wake) asked Gunn: "Is it the intent of this legislation to put the shaft to Wake County and Wake County alone?"

Supporters of House Bill 1224 say it's not aimed at any individual county. The bill is headed to the full Senate for a vote.