Dan Kane of the N&O writes an excellent piece detailing North Carolina’s complicated sales tax – a tax code riddled with special rates and exemptions granted to certain industries typically based upon their political clout. Here is a sample:
All told, the 102 sales tax breaks on the books in North Carolina cost the state an estimated $3.1 billion each year in lost revenue, more than enough to run the state’s prisons and courts for a year, according to the most recent Department of Revenue review. Seven of those loopholes, pushed by Democrats and Republicans, have been added since 2007, and those alone cost $9.8 million last year, the department estimates.
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The state’s sales tax of 4.75 percent has become a hodgepodge, as the construction business shows. Buy stone mined from North Carolina? Pay no state sales tax. Rent a backhoe? Pay the full tax. Materials to erect a building for a business are subject to the sales tax, but they are exempt if they are used for a building owned by a nonprofit, such as a church or hospital.
“I assume all it is, is, who was politically strong at a certain point of time and had enough clout to get the sales tax taken out of their products,” said Sam Hunter, president and CEO of general contractor T.A. Loving. “And it was probably all justified because it was good for the economic climate at the time.”
I ran a small business for nearly 30 years. I could never understand why I had to pay sales taxes on small hand tools liek screwdrivers while a furniture manufacturer paid little of nothing on a million dollar machine to reproduce table legs. Or why vitamins sold by a Chiropractor were part of services offered while my products had a sales tax. Why did beer distributors get 2% of the sales taxes collected to reimburse them for the effort while I had to eat the time. To add insult to injury I even had to pay for the check and the stamp to send them to Raleigh. It’s about time someone looked into these inequities.