State eyes services for sales tax

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N1201P61002CBy Jeff Aydelette | Staff Writer

RALEIGH – Legislating can be messy. Sort of like making sausage. Things often get thrown in at the last minute. And, there’s no better way to find obscure, and potentially hot topic stuff, than in the final section of a new law. With his signature Tuesday, Gov. Pat McCrory officially codified new legislation that has a warm fuzzy name – the Tax Simplification and Reduction Act.

We thought you might like to peruse the very last words of this new law. Pay particular attention to Item 7. That’s the seed that could quite quickly grow into a new sales tax on a multitude of services – things like hair styling, dry cleaning, chiropractic treatments, even baby-sitting.

Legal advice is also a service that could possibly be taxed, but don’t look for that to happen. There are too many lawyer-legislators in the North Carolina General Assembly who would squawk:


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The Revenue Laws Study Committee is directed to study the tax issues listed in this subsection. The Committee may report its findings, together with any recommended legislation, to the 2014 Regular Session of the 2013 General Assembly upon its convening.

  1. The scope and application of the privilege tax at the rate of one percent (1%) with a cap of eighty dollars ($80.00) that applies to mill machinery and on other machinery and equipment purchased by certain industries and companies.
  2. The feasibility of a preferential tax rate on diesel fuel sold to railroads, fuel sold to passenger air carriers, and fuel sold to motorsports.
  3. The authority of cities and counties to impose a privilege tax on businesses and the various State privilege license taxes.
  4. The impact of the elimination of the State and local sales and use tax refund on nonprofit entities and their ability to fulfill their stated mission.
  5. The benefits and fiscal impact of allowing corporations to deduct net operating losses as opposed to net economic losses.
  6. The simplification of the franchise tax base calculation and the elimination of the franchise tax.
  7. The feasibility of expanding the sales tax base to include additional services.
  8. The application of the corporate income tax rate reduction trigger formula.
  9. The low-income housing tax credit.
  10. The distribution of the sales tax collected on electricity and piped natural gas to cities.