Change to local sales tax option would cost Dare $1.2 million

By on March 1, 2017

 A bill introduced by a high-ranking member of the North Carolina General Assembly would change how much local counties get back from the state from the local sales tax, costing Dare County and its towns a combined $1.2 million in annual revenue.

The measure proposed by Sen. Harry Brown of Jacksonville, the Senate majority leader and co-chairman of the Senate appropriations and budget committee, would set a flat local sales tax return rate based on an individual county’s economic tier designation.

Dare County now gets back 1.49 percent of the 2 percent local sales taxes paid by consumers, the highest return rate of any county in North Carolina. But it would see its rate cut to 1.0 percent on the proposal since it is a Tier 2 county.

Local sales taxes are the second largest county-levied revenue stream and comprise on average 12 percent of total county revenues, according to the North Carolina Center for County Research.

The N.C. Department of Commerce annually ranks the state’s 100 counties based on economic well-being, with the 40 most distressed counties designated as Tier 1, the next 40 as Tier 2 and the 20 least distressed as Tier 3.

The tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state, according to the Commerce Department’s website.

If Senate Bill 126 is passed, Tier 1 counties would have a designated local sales tax return rate of 1.10 percent, Tier 2 of 1.0 percent, and Tier 3 of 0.9 percent, starting on Sept. 1.

That could cost Dare County an estimated $860,000 a year in revenue, while Duck, Southern Shores, Kitty Hawk, Kill Devil Hills, Nags Head and Manteo would see their portion reduced by a combined estimated $400,000.

Currituck County, also a Tier 2 county, currently gets 0.94 percent of local sales tax return, and would see an increase if it is bumped to 1 percent.

Dare, Currituck and Perquimans are the only Tier 2 counties in the area, the rest are Tier 1.

Perquimans would see a drop from 1.06 to 1.00 percent, while Camden would get the biggest increase in the region of 0.18 percent.

Local counties that would get an increase include Chowan (0.01), Washington (0.06), Hertford (0.09), Pasquotank (0.10), Tyrell (0.11), Hyde (0.12), Bertie (0.13) and Gates (0.15).

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