Senator Ruccho explained in committee this afternoon that HB 1224 is intended to allow counties to take advantage of future broadening of the sales tax base. You will recall that the General Assembly failed to extend sales taxes to a broad array of services last year during the tax reform debate, yet Senate leaders have vowed to readress the issue in the future.
As the General Assembly systematically attempts to eliminate revenue sources from local jurisdictions it appears that the Senate is trying to build a constituency they lacked last year in the tax reform debate.
One theory holds, that by starving the cities and counties of traditional revenue sources, they will be more likely to work for, and support additional sales tax revenue from a broader service base to help backfill for lost revenue from recent legislative actions.
One weakness in the Senate’s attempt to radically shift the North Carolina tax base from income to sales based was the lack of support from any powerful lobbying factions. Forcing an alignment with local governments would create more leverage on legislators and pit service sector professions, like architecture, against powerful political allies in cities and counties.