Privilege Tax talk at the General Assembly
(The Insider)
Tax Talk
Business lobbyists urged members of a legislative study committee to try to clean up what they say are haphazard, unfair local business privilege taxes. Andy Ellen, a lobbyist for the N.C. Retail Merchants Association, told members of the Revenue Laws Study Committee that the taxes range from gross receipts to flat fees, depending on the locality and the type of business. Ellen complained that gross receipts taxes can be especially unfair because different types of retailers earn different types of margins on their product. Ellen used the deep discounts offered by retailer this Christmas, which boosted business but cut their margin, as an example of the unfairness of privilege taxes collected using a gross receipts formula. Raleigh lawyer Mark Prak, who represent cable communications interests, said lobbyists for some industries are also able to get legislation passed that puts caps on the privilege taxes charged those businesses. “That creates some of the inequities,” he said. Prak added that he believes privilege licenses and taxes serve as an impediment to business start-ups.
The study committee took no action on privilege taxes or the other major tax issues that it's taken up in recent weeks. Committee members, though, again heard more debate on combined reporting, a type of corporate income tax reporting used in 21 other states to try to prevent multi-state corporations from transferring earnings to tax haven states. Joseph Crosby, of the Washington, D.C.-based pro-business Council on State Taxation, said the tax reporting method ignores business differences in different states. But Elaine Mejia of the liberal N.C. Budget and Tax Center said combined reporting would eliminate a competitive advantage that multi-state corporations have over businesses operating solely within North Carolina. (THE INSIDER, 1/08/09).
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