North Carolina – Senate to Vote on Increasing Sales Tax Collections

SALT Report 3822 – Just months after adding sales tax to car repairs and other services, the North Carolina state Senate wants to again change what services are taxed – a move that’s expected to add up to $80 million in revenue.

Senate leaders say the proposed tax change would address confusion about what services require a sales tax. Under the legislation that took effect in March 2016, whether a service is taxed largely depends on whether the firm performing the service is also selling materials.

That means a service – unclogging a toilet, for example – is subject to sales tax with a company whose business is mostly sales but exempt if a customer hires someone who only does the service. The goal was to help businesses that hadn’t previously collected sales taxes, but some complained of an unfair system.

Under the Senate budget provision, sales tax would apply to repair, maintenance and installation services regardless of what type of business is involved. The Senate is scheduled to vote on the full budget bill Thursday; the House budget does not include a similar provision.

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