In April county commissioners wisely decided not to change the method in which state sales tax is distributed in the county.
The N.C. Department of Revenue Sales collects the sales and use tax revenue. It takes a portion and sends the rest to the counties. The counties extract a portion and distribute the remainder on a rolling basis to all the incorporated cities and municipalities in their respective county on the basis of property tax value.
State sales tax revenue of about $20.77 million is now distributed in Carteret County, as in nearly all the other 99 counties in the state, using ad valorem tax collection (property tax) — point of sale distribution — as the base, the method of distribution.
N.C. Senate Majority Leader Harry Brown of Onslow and Jones counties, a Republican, wants the General Assembly to do just that – change the sales and use tax distribution in the state from the basis of ad valorem tax (property tax value) to population.
Taking a card from President Obama and his liberal, Democrat administration, Mr. Brown’s proposes to move millions in state sales and use tax revenue from coastal and urban areas to more rural areas. This is redistribution of wealth, in this instance tax revenue. If done, it would be a huge mistake.
It would impact tourism and the state’s overall economy for the worse.
If Mr. Brown’s bill is approved, it would move millions in states sales and use tax revenue from the coastal counties of Dare, Carteret and New Hanover and urban counties of the state to rural areas. But it wouldn’t solve the cultural and economic problems of the rural counties.
Mr. Brown’s proposed change would also penalize, unfairly, the state’s most populated areas, Charlotte and Mecklenburg County, Raleigh and Wake County, the Triangle, the Triad and the state’s most popular tourist destinations, Dare County, Carteret County, New Hanover County and some in the west.
The solution, the only solution, would be for these areas to raise property taxes — considerably.
Now 75% of the local option portion of sales tax revenue stays in the county or the city where sales occur, and 25% is distributed according to population.
Mr. Brown proposes to change that over four years so 80% of the money is distributed by population and 20% by sales location.
Were his proposal enacted, in the first year, FY 2016-17, Atlantic Beach, Beaufort, Bogue, Cape Carteret, Peletier and Pine Knoll Shores would each forgo 1% of ad valorem tax revenue, Cedar Point, Emerald Isle and Newport would each forgo 2%, Morehead City would forgo 3% and Indian Beach would gain 7%.
That would increase each year so that in the fourth year, FY 2019-20, Indian Beach would only forgo 1%, but Atlantic Beach would give up 8%, Beaufort, Bogue, Cape Carteret Cedar Point, Newport, Peletier and Pine Knoll Shores would each give up 9%, Emerald Isle would relinquish 10% and Morehead City would relinquish 11%.
To maintain services, all the towns in the county, perhaps excepting Indian Beach, would have to raise property taxes, as would Carteret County.
Gov. Pat McCrory, former mayor of Charlotte, says he’ll veto Sen. Brown’s bill because it “will cripple the economic and trade centers of our state that power our economy,” and “This bill will result in a tax increase for millions of hard working middle class families and small business owners throughout North Carolina.”
Had Carteret County commissioners adopted a per capita distribution, more than $2 million of sales tax revenue would have switched from the county and the four towns on Bogue Banks, the county’s tourism magnet drawing visitors to the county, to the seven incorporated towns on the mainland. And Carteret County would have lost almost $200,000 in sales tax revenue.
Instead of hurting some municipalities economically in Carteret County, Mr. Brown’s bill would hurt all of them, and damage other tourism centers. His bill would also economically injure many other counties that now generate the lion’s share of state sales tax revenue.
His bill should be killed.
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