Politics

Bill capping local taxes would cost city $300,000

By Bill Moss, Published: May 20, 2014

A bill that would cost the city of Hendersonville up to $300,000 in tax revenue is back in the North Carolina General Assembly.

"If the privilege license goes away, it's $300,000 in our budget," Connet told the City Council during a budget workshop on Friday. "It's been introduced so we'll see what it means."
The House was expected to vote today on a bill that would cap city privilege taxes at $100. Like many North Carolina cities, Hendersonville bases the privilege tax on gross sales, meaning small shops pay a small amount while supermarkets and big box retailers pay a hefty tax.
Connet told the City Council that the bill might be delayed until next year's session and become effective on July 1, 2016, assuming it passed. At least for now, it's alive, although plenty of bills that get introduced, debated and passed in one house or the other die when the session ends.
More than 300 cities and towns across North Carolina levy an annual privilege tax, generating $60 million a year statewide, a legislative analysis said.
"To further complicate matters, the General Assembly inadvertently repealed the business tax in 2013 as part of the tax overhaul measure that cut personal and corporate income taxes," the News&Observer reported. "The omnibus tax measure – House Bill 1050 – would reinstate it effective July 1 and help resolve murky legal issues about whether municipalities can collect the revenue for the first half of the year under the revision.
"But in doing so, lawmakers want to impose the cap. Under the proposed legislation, municipal leaders could charge up to $100 for each business location, effective July 1, 2015."
If the city of Hendersonville took a $300,000 revenue hit, it would have to find cuts to offset the loss or raise the property tax or fees. A penny worth of property tax in Hendersonville generates about $150,000.