RALEIGH — The “Sales Tax Fairness Act” proposed by N.C. Senate Majority Leader Harry Brown as a way to direct revenue to rural counties was on the minds of community leaders across the state on Tuesday following a conference at the General Assembly.
Scotland was among the 40 counties represented, with Scotland County Board of Commissioners chairman Guy McCook stressing that the additional income could be a game changer for small, rural communities.
The state’s current distribution scheme for the two percent of sales taxes returned to counties was established in 2007, with 25 percent of taxes distributed based on population and 75 percent based on where goods were sold.
Proponents of the act, S.B. 369, maintain that the current distribution of sales taxes disproportionately benefits areas with a vibrant retail presence that attracts shoppers from other counties.
“If you go to Moore County and buy a television set or an appliance, 75 percent of that sales tax stays in Moore County at the point of sale,” McCook said.
As proposed, the act would shift the distribution to 40 percent based on population and 60 percent based on point of sale for the 2016-2017 fiscal year, gradually reversing that formula until 80 percent of sales taxes are distributed based on population in 2019-2020.
Under the act, Scotland County would stand to gain more than $1.5 million in additional sales tax revenues each year, which as McCook pointed out would significantly expand a revenue stream in an environment where the county has few options when it comes to raising cash for new projects.
“When you have the highest property tax in the state, raising property taxes is really not an option for us,” he said. “We really don’t have any way to raise additional revenue as a community outside of the limited fees and things like fire tax and the availability fee that we just did for the landfill … and we have huge needs just like every other community does.”
Opponents of the bill say that the 17 counties which would lose revenue would have to raise their taxes in order to compensate.
“Folks out there say it’s Robin Hood stealing from the rich to give to the poor, but the fact of the matter is that this has only been going on for 10 years or so,” said McCook.
Late on Tuesday, Gov. Pat McCrory issued a statement decrying S.B. 369 as one of many “liberal tax and spend principles of the past that simply don’t work.”
Among the counties that would lose revenue through the proposed sales tax redistribution are retail hubs and areas, such as Dare, Boone, and Blowing Rock, with a healthy tourism industry.
“This legislation will decimate our travel and tourism sector, particularly in our mountain and beach communities, shop owners and their employees who depend on tourism for their livelihood,” McCrory’s statement read.
But for Scotland County residents, that is unlikely to detract from the tangible results — such as the construction of new schools and property tax relief — that McCook suggests could come about should the bill be adopted.
“It gives us the opportunity to do a lot of things that we’re not doing and it takes a lot of pressure off our property tax,” he said. “If I could get my wish, it would be to get our property tax below a dollar.”
Mary Katherine Murphy can be reached at 910-506-3169.