Back-to-school shoppers plotting strategy for this weekend’s sales-tax holiday better enjoy it while they can. The sales tax not only goes back to normal Monday, it also appears destined to go up in the coming months. The increase is hardly welcome, but there are not many alternatives when it comes to balancing state and county budgets during a recession.
Rowan County has proposed a one-fourth-cent sales tax increase to pay for a jail annex and an emergency radio system ó items that are necessities, not extras. To finance those programs, shoppers would pay an additional 2.5 cents on each $10 purchase. The alternative, says County Manager Gary Page, is a 2-cent increase in the property tax rate. On a home valued at $100,000, that would be $20 more in property taxes each year. Either way, you pay, but shoppers can at least control how much they buy.
The current sales tax rate in Rowan, Cabarrus and most other N.C. counties is 6.75 percent ó with 4.5 percent going to the state and 2.25 going to local government. (Starting Oct. 1, the state will keep another quarter of a percent that was going to the counties.) The proposed county increase, which will be on the November ballot, would raise the sales tax to 7 percent. It’s hard to imagine Rowan voters saying “aye” to any kind of tax increase, but they should give this one-fourth of a percent fair consideration.
The voters’ mood might be soured by the state budget, which right now proposes another 1 percent increase in the sales tax. There’s no referendum on that increase; the matter is in lawmakers’ hands even as we speak. But voters do eventually have their say in the ballot box, and they’re watching Raleigh closely this year. In addition to a sales tax hike, the state is looking at an income tax surcharge and other increased taxes ó the kind of stuff that could easily inspire another tea party.
Critics point to state programs that might have been cut to avoid tax increases but weren’t ó such as shortening prison sentences for habitual felons, cutting tax incentives for businesses or forcing drug companies to charge less for Medicaid drugs. But the latest version of the state budget is still austere, cutting funds for education, Smart Start, More at Four, an AIDS drug assistance program, Medicaid rates paid to doctors and more. There’s plenty to dislike in the budget; hard times force hard choices. Further cuts that might jeopardize public safety or economic development would only make matters worse.
Some mitigating factors for the proposed sales tax increases include the fact that they won’t go into effect until 2010, when experts say the economy should be improving, and the tax on food will stay at only 2 percent ó the category where an increase would hit low-income families the hardest. That softens the blow. The sales tax increase is not a perfect solution, but no perfect solution exists.