Speaking of sales taxes, the General Assembly needs to revisit the sales tax on food.
Oh, yes, there continues to be a tax on food, even if only at the local level.
Let’s review a little history here. First, a “temporary” sales tax was instituted in North Carolina in 1933, but it at least exempted food from taxation. (As has been the case for subsequent decades, the justification for that new taxation was to provide funding for public education.)
Then, a “temporary” state sales tax on food was enacted in 1961 at a rate of 3 percent, again with a justification of supporting education. And it was both subsequently raised and endured until finally being removed in 1999 – a new definition of “temporary,” just 38 years.
Unfortunately, during that “temporary” period, a local sales tax was also initiated that applied to food and groceries.
First, in 1971 the local sales tax was established at 1 cent on top of the state sales tax, then in 1983 and 1985, two half-cent increases were added. So, local governments also shared in the sales tax on food, to the tune of 2 percent.
In 1991, the state’s “temporary” tax was raised to 4 percent – and remember that by then, there was an additional 2 percent that was being collected in the name of counties.
The General Assembly wisely, and finally, decided to remove the state sales tax on food in the late 1990s, setting in motion a phased reduction in the sales tax on food, beginning in 1997, with a cut of a penny; another penny in 1998, and final removal in 1999.
Quite correctly, the General Assembly recognized that the sales tax on food was one of the state’s most regressive taxes, hitting hardest those least able to pay, people who spend the largest portion of their incomes on food for their families.
All that’s well and good, and thanks to the General Assembly for its historic roll-back of the state’s sales tax on food.
But, that same sales tax on food continues to cost all families across the state – although, granted, at the lower rate of 2 cents out of every dollar.
But why should the local sales tax on food be continued?
Simply because local governments are “used” to the revenues it generates?
That really seems to be the essence of any argument – to the extent, quite rarely, that anyone even discusses the issue.
We hardly think that’s a sufficient justification for continuing a tax that, really, should never have been imposed – and whose “temporary” status has long since overstayed whatever welcome it ever had.
We think it’s long since time for the General Assembly to return to the issue and eliminate the local sales tax on food, as well.
As with the original elimination of the state portion in the 1990s, it could be done in phases – a half-cent or cent at a time.
Over a few years.
But we can see no reason why the sales tax on food should remain in place at any amount.
Alternatively, the General Assembly should at least allow each county the option of removing food from being taxed within its jurisdiction.
Of course, the complications from county-by-county differences could be difficult for retailers; hence, better to eliminate it altogether.
