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Higher state sales tax taking effect Opponents say increased tax could hurt future growth by pulling money from the economy Oct. 15 - RALEIGH, N.C. (AP) — The sales tax on most goods rises from 6 cents to 6½ cents per dollar on Tuesday, an increase approved by the Legislature this session to help balance the state budget. A $2 item will cost $2.13 rather than $2.12 under the new tax. The pennies will add up to millions of dollars across the state as part of $300 million in new taxes approved by the Legislature to balance the state budget this year. The sales tax increase expires in 2003. Merchants have been busy recalibrating cash registers and reprogramming computers to charge the higher sales tax, even as state government worries anew that the tax increase won’t be enough. Only three weeks since the Legislature approved the state budget, the state finds itself in another budget hole. Gov. Mike Easley ordered state agency heads last week to find savings in their budgets to make up for a 5 percent loss in expected revenue collections in the first quarter. The fiscal year began on July 1, and the state was hoping for 2.1 percent growth over last year’s first quarter. But because of the terrorist attacks, revenue ended down 2.9 percent. Even before the terrorist attacks, the sluggish economy was not picking up. Now, the future is so uncertain that state fiscal analysts won’t make projections of revenue, said head budget officer David McCoy. Instead of relying on projections that once worked, the governor will have to react to changing budget conditions on a monthly basis, said state Rep. Gregg Thompson, R-Mitchell, co-chairman of the House Appropriations Committee, said executive leadership is needed to cope with the budget problems. “We make revenue growth projections and base the budget on those projections, but the money just hasn’t come in,” Thompson said. Thompson said he is concerned that the increased sales tax could hurt future growth by taking money out of the economy. In addition, merchants have complained that the state gave them only a week’s warning to increase the sales tax. “We got a note in the mail in the middle of last week. That’s four or five days’ notice,” said Philippe Brainos, restaurant manager at Mugshots restaurant in Durham. “We have to reprogram the computer. When you ring the food the computer automatically prints the taxes.” Despite his irritation at the short notice, Brainos said patrons probably would not notice or feel the difference. “A $20 dinner, for instance, it’s only going to cost an extra 10 cents,” he said.
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© 2001 Lincoln Times-News |
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