The North Carolina General Assembly devoted much of the 2013 and 2014 sessions to slashing income taxes and raising the standard deductions, while tossing out most personal income tax deductions. The move was heralded as a way to allow taxpayers to keep more of their hard-earned money.
The N.C. Tax Simplification and Reduction Act was signed into law in July 2013. The former graduated rates for personal income taxes that ranged from 6 to 7.75 percent were replaced with a flat rate of 5.8 percent in 2014 and a slight dip to 5.75 percent in 2015. The corporate tax rate dropped from 6.9 percent to 6 percent in 2014 and will be 5 percent in 2015.
To help offset the loss of revenues on personal and corporate income taxes, effective in 2014, the sales tax base was expanded to include such things as raising the sales tax on mobile homes from 2 percent with a $300 cap to applying the full state sales tax rate of 4.75 percent. The sales tax base also was expanded to include many service contracts as well as entertainment and entry tickets to certain attractions. The sales tax holiday weekend in August and the Energy Star appliance sales tax holiday weekend in November were repealed.
The sales tax exemption for Cape Hatteras Electric Cooperative was removed and initially was to tax the full 7 percent applied to electric companies but negotiations produced a compromise that allowed the first 3.5 percent to be applied in 2014 and the remaining 3.5 to be added in 2015. Per law, the cooperative had been exempt from sales tax because there is no competition for service in that area because of the high cost.
The fiscal note for the bill noted that the changes would result in state budget revenue shortfalls of $87 million in 2013-14, $438 million in 2014-15, and $600 million in years after that.
But what the General Assembly gives, it also has the power to take away.
In addition to expanding sales tax base, the legislature also zeroed in on other sources of revenues, including raising taxes (aka fees) on both commercial and recreational fishermen and hunters.
In 2014, the Standard Commercial Fishing License (SCFL) was increased by 25 percent, raising the cost from $200 to $250 for in-state residents. In 2015, when the renewal of licenses become due on July 1, the cost will be upped to $400. The increase to $400 was requested by the fishing industry to pay for the Division of Marine Fisheries’ At-Sea Observer Program that must be continued to avoid a federal shutdown of the industry because of interactions with turtles.
In addition, the cost of an in-state resident Retired Standard Commercial Fishing License will increase from $125 to $200. The cost of other commercial industry licenses also will see increases in 2015 when advance purchase of the licenses opens in April. The extra revenues will be placed in a dedicated fund overseen by a board of commercial fishing organizations to ensure that it is used for the intended purpose.
Most Wildlife Resource Commission license taxes also will increase. Recreational fishermen who fish in inland and/or joint waters, as well as hunters, also will find lighter wallets in 2015 when fees increase by varying amounts — with most rising approximately 25 percent.
The Annual Sportsman License tax will jump from $40 to $50. Lifetime Senior Sportsman Licenses will remain at $15 but the age for eligibility is changing from 65 years old to 70. Those born before Aug. 1, 1953 will be entitled to the $40 price.
The Resident Adult Lifetime Unified Sportsman/Coastal Recreational Fishing License tax fee will remain at $675 for those under 70. The Lifetime Unified Sportsman/Coastal Recreational Fishing License will remain at $30 for those born before Aug. 1, 1953. Fishermen born after that date will not become eligible until the age of 70.
The cost for a North Carolina Coastal Recreational Fishing License will not change.
For more information on licenses and fees, go to http://www.ncwildlife.org/Licensing.aspx or http://portal.ncdenr.org/web/mf.
