THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, July 9, 1994 TAG: 9407090226
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY BETTY MITCHELL GRAY, STAFF WRITER
LENGTH: Medium: 57 lines
House Speaker Daniel T. Blue says he would agree to a repeal of the state's intangibles tax - if the money from a replacement tax is used to benefit the state's public schools.
Instead of the intangibles tax, Blue suggested levying a 2 percent tax on income from stocks, bonds and mutual funds.
The plan, Blue said, ``is consistent with the emphasis in the House this year on education.''
Under Blue's proposal, money from the replacement tax would go into a new fund, the Public School Trust Fund. Counties, currently charged with building local schools, could tap into the trust fund to pay for new buildings.
Blue floated the idea in a telephone conference call Thursday with reporters from about 10 newspapers across the state after discussing it with the House Democratic Caucus on Wednesday.
At the start of the session and during his telephone interview, Blue said he would support a repeal of the intangibles tax only if the tax burden on a replacement tax would be on those who currently pay the intangibles tax. The intangibles tax is 25 cents per $100 on the amount of stocks, bonds and mutual funds.
``I want to make sure that the people who pay the current tax continue to pay the tax,'' Blue said.
The Senate has approved a bill that would repeal the current intangibles tax and levy a new 1 percent tax on income and interest from stocks, bonds, savings accounts, certificates of deposit and the like. Those with investments that earn less than $600 a year would not pay the tax.
Supporters of the Senate bill say the intangibles tax keeps people and companies who would have to pay the tax from moving to North Carolina. Opponents say the measure would transfer most of the tax burden from wealthy investors to the middle class.
The proposed change is before the House Finance Committee whose members voted last week against sending the measure to the House floor for debate.
Killing the intangibles tax of 25 cents per $100 in value, then compensating cities and counties for the lost revenue, would cost about $90 million to $95 million a year.
Under Blues plan, municipalities could recover their portion of the lost intangibles tax revenue from an increase in privilege license taxes they charge. Counties would be compensated by being allowed to draw from the Public School Trust Fund based on the number of students in their school systems.
``There are a lot of rough details that need to be worked out,'' Blue said. ``And there may not be enough time to do that before the session ends.''
Members of the N.C. League of Municipalities and the Association of County Commissioners say they want to see more details of Blue's proposal before they comment on the plan. by CNB