Recommendations of the LSC to the NC General Assembly

The following recommendations have been identified as high priority items by the State and Local Fiscal Modernization Study Commission. In summary, the recommendations are to:

make the sales tax more progressive by broadening the sales tax base to include many services that are currently exempt from the sales tax (warranty and repair services, entertainment services, etc.) and by broadening the sales tax base to include currently exempt food items;

broaden the individual income tax base, take low-income taxpayers off the tax rolls and reduce income tax rates across all income levels;

reduce the top corporate tax rate and adopt combined reporting;

provide relief to local government through the State’s assumption of a portion of Medicaid costs;

provide greater flexibility to city and county governments with respect to how they raise revenue by allowing a menu of options including real estate transfer fees or deed stamp taxes, impact fees, motor vehicle license fees and other vehicle use fees, taxes on prepared food and drink, and occupancy taxes;

provide funding for water and sewer infrastructure;

eliminate differential sales tax rates; and

modernize the local ad valorem tax on real property and provide local governments flexibility in providing tax relief for elderly and fixed income residents.