GOP tax reform bill eliminates NC sales tax holiday - WNCN: News, Weather

GOP tax reform bill eliminates NC sales tax holiday

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A provision in the Tax Reduction Act calls for the elimination of the back-to-school sales tax holiday as well as the Energy Star tax holiday in 2014. A provision in the Tax Reduction Act calls for the elimination of the back-to-school sales tax holiday as well as the Energy Star tax holiday in 2014.
RALEIGH, N.C. -

If the Republicans' tax reform package receives the final stamp of approval from Gov. Pat McCrory, North Carolinians will see a repeal of the popular sales tax holiday weekend.

A provision in the Tax Reduction Act (H.B. 998) calls for the elimination of the back-to-school sales tax holiday as well as the Energy Star tax holiday in 2014.

The House passed the measure by a vote of 77-38. The state Senate passed H.B. 998. by a vote of 32-17.

G.S. 105-164.13C provides a sales tax exemption for certain items sold between 12:01 a.m. on the first Friday in August and 11:59 p.m. the following Sunday. The so-called holiday is scheduled to start at the start of the school year for many students.

Last year, the state lost an estimated $13.6 million in revenue, while in 2011 the state Department of Revenue says it lost an estimated $12.6 million during the back-to-school holiday weekend.

If signed, the Tax Reduction Act eliminates the statute, along with G.S. 105-164.13D, which offers a tax exemption on qualifying Energy Star appliances purchased the first weekend in November.

The back-to-school sales tax holiday was enacted by the General Assembly and signed into law by then-Gov. Mike Easley in 2001. The first sales tax holiday was held in August 2002.

The Energy Star tax holiday was introduced in 2008 to encourage the use of more energy efficient products while saving consumer money.

North Carolinians save roughly $8 for every $100 they spend on tax-exempt items, in addition to additional sales or incentives offered by some retailers. Retailers also said the tax free weekend was the second-biggest holiday for shopping behind Black Friday.

Senate President Pro Tem Phil Berger's office said in a statement that the Tax Reduction Act "more than offsets one-time savings from things like weekend sales tax holidays."

"Our plan reduces the state personal income tax significantly, which means everyone will have more money in their pockets day-to-day," Berger's office said.

The North Carolina Retail Merchants Association says the sales tax holiday spurs employment and payroll taxes, with retailers adding, on average, 8,300 payroll hours over the three-day event.

The Tax Reduction Act would reduce corporate and individual income tax rates and expand the sales tax base slightly. It would also cap mortgage interest and real estate taxes at a $20,000.

However, the bill also applies an increase in sales tax to electricity, movies and service contracts.

Democrats argue that state lawmakers would have $2.4 billion less available for government spending over the next five years. They also say the bill helps the wealthiest and large out-of-state corporations at the expense of working families.

This year's sales tax holiday is set for Aug. 2-4.

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