North Carolina's Sales Tax Called "Outdated".

According to a September, 2012, report issued by the North Carolina Budget and Tax Center (BTC), the state’s sales tax “is currently narrow, outdated, and unstable… .” Improving it would help to modernize North Carolina’s revenue system. 

In Improving the Sales Tax: A Critical Step to a Modern Revenue System, authors Alexandra Forter Sirota and Brenna Erford Burch summarize the main problems facing North Carolina’s revenue system:

  • “it is not aligned with the state’s economy
  • it raises an inadequate amount of revenues
  • it asks more from those with the least ability to pay.”

The authors propose that North Carolina:

  • broaden the base of the sales tax to include “all consumer services except health care, education and housing.”
  • strengthen the Earned Income Tax Credit
  • ensure that the sales tax does not become the primary source of revenue for the state.

It remains to be seen whether or not the state will consider the recommendations put forth in the BTC report.

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