New sales tax on services starts today

Published 12:00 am Tuesday, March 1, 2016

By Amanda Raymond

New statewide sales taxes on repair, installation and maintenance services will take effect today, and some business owners are not happy about it.

The state budget signed into law in September of last year included increasing the number of services that have a sales tax attached to them. Starting today, services like car repairs, appliance and flooring installations and jewelry and shoe repairs will have a sales tax.

“I think it’s crazy,” Kelley Riley, owner of Kelley’s Auto Repair, said.

He said people are already struggling with recent layoffs and the taxes will just be an extra burden.

The new sales taxes were part of a shift by the Republican-led legislature to lower income taxes by expanding the number of services subject to sales taxes. The budget included about $400 million in income tax cuts.

Cuts in the individual income tax rate will start in 2017, and the raised standard deductions started this year.

The combined state and local tax rate for Rowan County is 7 percent, according to the North Carolina Department of Revenue.

The business providing the service must be defined as a retailer to be included in the sales tax expansion. In other words, businesses that just provide maintenance or repair without selling any products are not subject to the sales tax.

Many businesses already charged sales tax on products like parts and equipment, but not labor.

Some of the new revenue from the sales taxes will be redistributed to small and rural counties for schools, community colleges and economic development projects.

Republicans have said the income tax cuts will benefit workers more immediately, while consumers will only come across the additional sales taxes a couple of times a year.

Democrats have said that the new sales taxes will negatively affect families that have less disposable income.

Mark Kraus, owner of Integrity Auto Repair, said people with low- to mid-level income will probably be affected the most by the new taxes.

“People are going to feel it,” he said.

Employees at Queen City Audio Video Appliances said people will be upset about the new taxes at first, but because many the services are necessary, they will still purchase them.

The Associated Press contributed.

Contact reporter Amanda Raymond at 704-797-4222.