Associated Press
RALEIGH -- North Carolina consumers are about to feel another pinch in their wallets at the mall, the convenience store and most every retailer in between.
The state's sales tax goes up a full penny today, bringing the total rate charged in most counties, including Durham, to 7.75 percent. At the same time, cigarettes, beer, wine and liquor will have higher excise taxes, all of which are likely to be passed on to retail buyers.
Lawmakers and Gov. Beverly Perdue agreed to raise these taxes in early August as part of a $991 million package designed to narrow a portion of a budget gap for this year projected by Democratic leaders at more than $4 billion. The rest of the gap was closed with federal stimulus dollars and spending cuts.
Without additional revenues, spending reductions demanded of state agencies and public schools would be worse, one legislative leader said Monday.
"There's nobody that wants to increase taxes, but concurrently nobody wanted to lay off [more] school teachers or cut health programs or let inmates out of jail any time soon," said Rep. Pryor Gibson, D-Anson, co-chairman of the House Finance Committee.
With the state's unemployment rate stuck around 11 percent recently, Republicans and anti-tax groups contend voters struggling to scrape by won't ignore the higher sales and excise taxes.
"People are already having to pinch pennies," said Dallas Woodhouse, director of the state chapter of Americans for Prosperity, a conservative-leaning fiscal watchdog group. "I don't think there's any doubt that they're going to notice."
The higher sales and income taxes are considered temporary. The extra cent charged on every $1 in purchases expires July 1, 2011, while the income tax surcharge expires at the close of 2010.
The excise taxes, however, are permanent.
Cigarette taxes will increase by 10 cents per pack to 45 cents, an incremental sign of tobacco's diminishing political power in North Carolina. Just five years ago, the tax was 5 cents per pack.
The beer and wine tax rate essentially hasn't changed in at least 30 years. Alcohol buyers may take a second look when they read sales receipts because they'll also have to pay the higher sales tax on their purchases, too.
