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Board favors sales over land-tax plan

Thursday, August 2, 2007
(Updated Sunday, July 20, 2008 - 10:34 pm)

Notice to Guilford County property owners: That "home tax" you've been hearing about probably won't happen here.

But you might pay more in sales taxes.

That's the message county commissioners seemed to be sending this week as they considered new ways to pay for schools and other expenses without raising property taxes.

Interviews with seven of the 11 commissioners showed little support for raising what's known as the land-transfer tax. That plan would charge home sellers up to 0.4 percent of the purchase price — or an extra $800 on a home sold for $200,000.

Commissioners were more enthusiastic about the sales-tax plan, which would raise the countywide sales tax one-quarter cent — adding $1.25 to the price of a $500 television.

That tax would generate an extra $15.7 million for the county, or about $2.1 million more than the transfer tax, according to early estimates.

"Of the two, I think the quarter-cent sales tax is probably a little more palatable," said Democrat Paul Gibson, the commissioners chairman.

The options weren't available until Gov. Mike Easley signed the $20.7 billion state budget. Counties said they needed more ways to bring in revenue other than jacking up property taxes, so state legislators gave them other choices, and the governor agreed.

Installing either new tax requires a two-pronged process: County commissioners must vote to send the measure to a referendum. Then voters would decide whether to tax themselves. Commissioners have talked about scheduling bond votes in May 2008.

Guilford commissioners will likely discuss the matter in the next month or so, Gibson said.

But don't expect much support for the transfer tax, which has powerful opponents.

Dubbed the "N.C. Home Tax" and panned on a Web site called itsabadidea.org, the N.C. Association of Realtors spent hundreds of thousands of dollars lobbying against it. The group said the tax would hurt clients and slow the real-estate business.

Plenty of county commissioners agree, though some said they wanted more time to study the options.

"We should be trying to encourage people to buy houses, not penalizing them for owning a house and selling a house," Democratic Vice Chairman Melvin "Skip" Alston said.

"The more we tack on in fees, I think the fewer people we'll have owning homes," Democrat Carolyn Coleman said.

"If anything, it's going to discourage people from (buying)," Republican Billy Yow said.

The sales-tax plan has more support, but it's unclear whether enough commissioners want to send the idea to the voters.

A vote this year to ask state legislators to give the county the authority to add one penny to the sales tax failed on a 6-5 vote. But Gibson said this week that a couple of commissioners had said they wouldn't vote for it because the state would never approve it. The current sales tax charges $6.75 on a $100 purchase.

"I would support the sales tax," Republican Linda Shaw said, "in hopes that we will not have to raise property taxes for a while."

Commissioners have increased property taxes in six of the past seven years.

The county must also consider the extra cash it's getting from a new Medicaid relief plan before it asks voters to approve another tax. The N.C. Association of County Commissioners, citing state figures, said the county will get an extra $1.4 million this year,

$5.1 million next year and

$8.9 million the year after that.

The county wants to check those numbers.

"I think it's safe to say 'several million dollars,'" Budget Director Mike Halford said, "but we'd like to spend some more time analyzing the state's numbers to make sure they reflect local conditions."

Contact Nate DeGraff at 373-7024 or ndegraff@news-record.com

THE TWO TAXES
Land-transfer tax
Who gets taxed? The seller of property.
How much? Up to 0.4 percent of the purchase price.
Whats the bottom line? The seller of a $200,000 home pays up to $800 extra in land-transfer taxes.
Sales tax
Who gets taxed? People who buy goods in Guilford County. Taxable items include clothes, electronics, furniture and lots of other stuff but not food.
How much? One-quarter cent
Whats the bottom line? Add 15 cents to the cost of that $60 shirt, or $1.25 to that $500 TV.

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