May 6, 2008
RALEIGH – Sixty-six percent of North Carolina voters rejected local tax increases Tuesday, sending 22 of 24 proposed tax hikes to defeat. Those results send a message that local governments should avoid pursuing sales and land-transfer tax increases in the future, said John Locke Foundation President John Hood.
“More than 540,000 voters in nearly a quarter of the state’s counties had a chance to tell county commissioners what they think about higher tax rates,” Hood said. “More than two-thirds of those voters delivered a clear signal: elected leaders need to forget about draining more money away from the local taxpayer.”
Voters in four counties (Ashe, Gates, Orange, and Tyrrell) rejected a proposed tripling of the land-transfer tax. The increase would have raised the tax on the transfer of a $200,000 home from $400 to $1,200. Proposed land-transfer tax hikes have failed all 20 times counties have considered them since November 2007.
“Some county commissioners apparently ignored the news last fall, when 80 percent of voters rejected land-transfer tax increases, sending all 16 proposed tax hikes to defeat,” Hood said. “Now voters in four counties have had a chance to say no to this tax. Sixty-five percent of them said no. Even in Orange County, one of the counties friendliest to the local tax man, two-thirds of voters rejected this land-transfer tax.”
Voters in 18 of 20 counties rejected a proposed 0.25 percent increase in the local sales tax. Cumberland and Haywood County voters approved the sales tax hike, while the idea headed to defeat in Duplin, Edgecombe, Gaston, Greene, Guilford, Henderson, Hertford, Lee, Lincoln, Moore, Nash, Onslow, Randolph, Rockingham, Stanly, Wayne, Wilkes, and Wilson counties.
“Haywood had the largest support for a sales-tax increase, and the ‘yes’ vote there was 57 percent,” Hood said. “Cumberland commissioners won support for their sales tax hike with a close 52-48 margin. In no other county did the sales tax hike win more than 45 percent of the vote.”
“Many of the counties that rejected higher sales taxes gave the idea a resounding no,” Hood added. “More than 92,000 voters in Guilford County alone rejected a sales tax hike. The sales tax went down in Guilford by a three-to-one margin. The margin was even higher in Wayne County, where 82 percent of voters said no to higher local sales taxes.”
Tuesday’s local tax votes followed publication of John Locke Foundation research this spring questioning the counties’ justification for higher taxes. A series of JLF reports showed that most counties considering tax hikes could raise far more money by using their existing revenue streams more efficiently.
“In some cases, the counties could generate more than 10 times as much money for high-priority spending items simply by taking the steps outlined in these reports,” Hood said. “Voters understand that their local tax burdens are high enough — if not too high. Tuesday’s votes should send that same message to county governments across North Carolina.”