In 2013, the new General Assembly held the sales tax at 4.75%, while expanding the base. Consumption-based taxes like the sales tax are more stable and less economically destructive than income taxes which discourage savings and investment.
The General Assembly had recently ended the 1-penny “temporary” sales tax hike over objections from then-Gov. Beverly Purdue.
Taxpayers rightly lost faith in the promise of “temporary” taxes under former General Assemblies. In 2001, leaders enacted a “temporary” local and state sales tax hike as a part of a larger tax increase package along with a “temporary” new, high-income tax bracket. Rather than expiring in the time frame originally promised, these increases were renewed several times. In the end, a half-penny sales tax increase was made permanent. Taxpayers were right to be skeptical of “temporary” tax increases.
In the last ten years, the Republican-led General Assembly has not increased the sales tax. Currently, the sales tax generates 32% of total tax revenue. In 2013, the sales tax made up 27% of total tax revenue.
