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Wednesday, 10 October 2012 14:58

State candidates wrangle over 1-cent sales tax

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fr issuesDemocratic and Republican candidates squaring off in state races this year offer voters a clear choice on a key philosophical issue gripping North Carolina during the past two years: taxes versus budget cuts.

The Republican-controlled General Assembly cut the state sales tax by 1-cent last year, essentially undoing a sales tax hike put in place by Democrats two years prior. Getting rid of that extra cent meant coming up with $1 billion in budget cuts.

Now, as the election approaches, candidates are in a bitter blame game over whether lower taxes and their accompanying cuts were drastic and short-sighted, or just the boost the economy needed during the recession.

Local Democrats running for state office claim that cutting the sale tax was the wrong move by Republicans and would vote to implement some sort of comparable sales tax if elected. Meanwhile, Republican candidates say it was the right move and any more taxes would be bad for residents and the job market.

The 1-cent sales tax in question had been enacted by a Democratic-controlled legislature in 2009. It was the height of the recession, and the state was facing a $5 billion budget shortfall at the time. The tax was intended to reduce the budget gap and lessen the impact of cuts.

It was billed as a temporary tax, slated to sunset in 2011. But when 2011 rolled around, state lawmakers still faced tough choices over cuts and insufficient revenues.

By then, Republicans controlled the legislature, many of whom ran on a platform of lower taxes in the previous election. They allowed the additional 1-cent sales tax to expire.

It became a point of contention between the pro-business and lean government priorities of Republicans and the public program-oriented mindset of Democrats.

The 1-cent sales tax hike in 2009 was just one part of a temporary tax package at the time. The plan also included a personal income and corporate tax surcharge on top earners, expected to raise an additional $200 million per year for the state. That tax hike was also allowed to expire.

 

 

Where they stand

N.C. House of Representatives, District 119

This seat includes all of Jackson and Swain counties and half of Haywood County (Waynesville and Lake Junaluska area, including Iron Duff).

Joe Sam Queen, D-Waynesville

Queen explained why he was against allowing the tax package to expire, the implementation of further tax breaks and the cuts that resulted.

“They cut the 1-cent sales tax and used that as an excuse to cut education to the core and slash an estimated 20,000 jobs in education and health care across the state. At a time when breadwinners were in need, we lost 79 teachers and teacher’s assistants in Haywood County alone, and a proportional number in all other counties across Western North Carolina.

“Their budget represents a race to the bottom rather than meeting the needs of our state. They’ve given tax cuts to the wealthiest and taken service away from the neediest. They lie about their tax policies: they have not cut our taxes; they cut rich people’s taxes, and they’ve killed jobs.

“The cuts that were made are actually counterproductive — the long-term consequence of these cuts ultimately will be more expensive than any initial savings.”

Mike Clampitt, R-Bryson City

Clampitt says he was in support of allowing the temporary sales tax to expire and lightening of the tax burden in the state and would not support increases in the future.

“It’s a no-brainer: the more money people have in their pocket, the more money that they have to spend. The cent sales tax was a temporary measure put in place — if temporary taxes are not allowed to expire, politicians lose credibility.

“Revoking these taxes helps people and stimulates the economy because people have more money to spend. Likewise if the government curtails spending then we don’t have the need for the tax.

“Some of the comments I’ve heard lately from other side say that money was needed by the state, and they wanted to continue the tax. But, my response is if the government collects money they find more ways to spend it. Bottom line is people know better how to spend their money than the government does.”

 

N.C. House of Representatives, District 118

This seat includes Madison and Yancey counties, and half of Haywood County (Maggie Valley, Canton, Clyde, Bethel, Cruso, Crabtree and Fines Creek).

Ray Rapp, D-Mars Hill

Rapp spoke in opposition to the Republican supported budget, which included cutting taxes and then cutting spending by the same amount because of its impact on education.

“There was so much talk on the Republican Party’s side about the giant deficit, but you add to that deficit the elimination of the 1-cent sales tax, and you increase the hole the state was facing.

“My observation is when you’re in a hole: stop digging. But, they dug us deeper into debt and we began making draconian cuts — over $900 million to education.

“At a time when we needed to be adding to education — specifically because of a spike in community college enrollment when folks who were unemployed were going back to school to learn or train to be more attractive in the job market — they make the largest cuts in the history of North Carolina.

“That 1-cent temporary sales tax was supposed to be extended until we got the state back on solid ground — it amounts to $0.25 extra per day, or $88 dollars per year, for each household. But, cutting it translates to loss of 6,000 educators, teacher’s assistants and support staff.”

Michele Presnell, R-Burnsville

Presnell said she was against higher taxes for residents. She saw trimming down the amount spent by government as a better alternative to raising more revenue.

“I’m against the 1-cent sales tax because I’m not going to raise taxes on the people in my district — I would not vote for that.

“If we personally have to struggle with our own checkbooks and manage our own checkbooks, then I think the state should, too. You sometimes have to cut back on things to balance the budget rather than balance the budget on the backs of the taxpayers. I do not agree with adding any more sales tax.

“Things are getting better, and every year it will continue to get better. That sales tax was put out there to pay for more education. But what we needed to do was rearrange who got paid and take some administration out of Raleigh.

“(Gov. Beverly) Perdue wanted to use that sales tax to pay for more teachers, but they wanted to fund it on the backs of taxpayers, and I won’t do that.”

 

N.C. Senate, District 50

The seat includes the seven western counties, including Haywood, Jackson, Macon and Swain.

John Snow, D-Murphy

Snow criticized what he called “deep cuts” to education — from the public schools to community colleges to universities — in exchange for lower sales tax.

“These cuts need to be restored,” Snow said. “It is shocking that the Republican legislature is unwilling to consider the sales tax but are willing to raise the tuition at the UNC system by 10 percent and raise tuition at the community college by 23 percent over the last two years. Then in addition, raising over $100 million in state fees like court costs and toll fees.”

Snow pointed out that in some instances, residents are actually paying more.

“These tuition hikes and increased fees are nothing more than a tax increase on our working families at a time when our families are trying to recover, educate their children and exist in a recession economy.”

Jim Davis, R-Franklin

Davis claimed it was the Democrats’ own decision not to pass a permanent sales tax increase back in 2009. Instead, they billed the extra 1-cent as temporary and thus knew it would expire. He also said he favored an economic policy that avoids higher costs to consumers.

“It was only a two year sales tax. It wasn’t a permanent increase — if they wanted a permanent sales tax, they should have voted for a permanent sales tax increase. We just allowed it to expire.

“If you ask me ‘Would I have voted for it in the first place?’ No, I would never vote for a tax increase at the height of a recession. Why in the world would you make it more difficult for people to pay their bills when they’re already having a hard time doing it?

“I thought it was a bad move when they passed it, and economically, it added to the burden on the people.

“And the man running against me to fill the seat voted in favor of it, so there is a clear distinction on this issue between us.”

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