The Republican who introduced a bill that allows municipalities to offer a .25¢ sales tax exposes the folly of the GOP tax cuts over the last few years and the negative impact they’re having on North Carolina’s most struggling communities. Instead of providing investments in infrastructure and education, the GOP insists on continuing of offer tax cuts that have disproportionately benefited corporations and high earners. That may be good for the wealthy, but it’s been bad for the parts of the state that are struggling.
As Rep. Stephen Ross says in the N&O, “It’s important to consider how many towns have suffered losses in North Carolina from decline home values, closing manufacturing plants, and loss of revenue streams like privilege tax.” Almost half of North Carolina’s 100 counties are losing population. Declining population means declining demand for property, leading to a downward spiral for property tax revenue, the primary source of revenue for local government.
Back when Republicans decided to cut the privilege tax, critics warned of the hit to municipalities. Republicans denied that the loss of revenue would be significant and said, besides, towns could offset the loss by cutting spending—like poor towns are flush with cash. They were wrong. The loss of revenue has been significant, especially as the state has cut its budget for public schools and services.
The poorest counties have been stripped of sources of revenue, leading to rising tax rates that discourage economic development. Now, they are asking to institute a regressive tax that will probably transfer resources from the pockets of rural residents to the coffers of urban counties where much of the retail is located. They may need the sales tax to fill short-term needs for revenue, but they need serious investments from state government if they’re going to stanch the bleeding.
When Roy Cooper talks about a budget with vision, he’s talking about investments that will help North Carolinians who need a boost. Instead, Republicans have boosted the people who are already doing well. The sales tax that they’re requesting will likely see declining revenues as retail leaves and population declines. The people in those small towns don’t need taxing options nearly as much as they need leaders with visions and plans.