Governments fear losing business tax (Richmond County Daily Journal)
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Staff and Wire ReportsMunicipal governments may lose one means of taxing local businesses in this year’s state budget.
The privilege license tax is collected through a fee businesses pay to do business in a municipal government’s jurisdiction.
As the House and Senate haggle over what to do with a shortfall between state revenue and spending, one plan would reportedly eliminate this source of revenue for local governments and replace it with other sources.
Privilege license taxes don’t account for lavish sources of revenue in Richmond County, but municipal administrators say they wouldn’t like to lose it.
Rockingham City Manager Monty Crump said the city only expects to collect about $12,000 from the licenses in the upcoming year (down from $14,000 over the two previous years), but they have traditionally been used for record-keeping purposes.
“When a business applies for a privilege license, it’s triggers a fire inspection, it triggers making sure the zoning is right and there is the proper use of the property,” Crump said. “It triggers a lot of things that the public benefits from.”
He said Rockingham administration has traditionally used the permits to track what businesses are open in the corporate limits, what businesses have shut down and what type of condition the facilities of those businesses are in.
“It’s not a lot of money, but it’s important for the purposes of record keeping,” Crump said.
Hamlet Tax Collector Gail Wise said the tax generates about $8,000 a year, which is “not a significant source of revenue” for the City of Hamlet.
In Ellerbe, Tax Collector Rosann Gerald said the tax generated more than $1,500 during the 2008-2009 fiscal year.
“That doesn’t sound like a whole lot, but every little bit helps,” she said.
In other parts of the state the tax does account for a significant amount of money. In Raleigh, the tax generates about $7 million a year, City Chief Financial Officer Perry James told the News and Observer.
The North Carolina Metropolitan Mayors Coalition said the tax created $54.7 million for local governments statewide over the last year.
“At a time when cities are hurting economically and have already adopted their budgets, the loss of the privilege tax will result in a loss of services,” Julie White, the coalition director, was quoted in the N&O story. “Local governments already have very limited local taxing options. Why would they take away one of the few tools they have?”
However, Senate Finance Committee Co-Chair Sen. David Hoyle said that if the move was made, it would be part of a concerted effort to restructure the state’s tax base.
“Local governments wouldn’t lose any money,” he was quoted. “They’d gain money … We’re a service economy now.”
“The goal in the end is not to have cities lose any money,” Senate Tax Attorney Sabra Faires said. “They’ll get it in other ways than they get it now. That’s the theory. The details aren’t nailed down.”
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