THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, July 10, 1996 TAG: 9607100375
SECTION: LOCAL PAGE: B2 EDITION: NORTH CAROLINA
SOURCE: BY DENNIS PATTERSON, ASSOCIATED PRESS
DATELINE: RALEIGH LENGTH: 89 lines
The Legislature's special session was supposed to be about resolving the budget dispute, but all the debate Tuesday was over tax reductions.
The House and Senate Finance committees both approved packages that reduce the sales tax on food, the corporate income tax and the tax on soft drinks, and include other tax proposals.
``For sure this is a Christmas tree,'' said Rep. Joe Hackney, D-Orange, describing the House package. ``I know a Christmas tree when I see one.''
``It has an ornament on there for everybody,'' said Rep. Paul Luebke, D-Durham.
The House committee did agree to drop one item - a sales tax exemption for vitamins sold by chiropractors.
The House package also includes tax credits intended to spur economic growth, which the Senate handled in a separate bill.
Rep. Jack Hunt, D-Cleveland, asked to hear from economic developers about the tax credits but was not given a chance until after the bill already had been approved by the committee.
``It looks like the horse is already out of the barn,'' Hunt said, when asked if he wanted to hear from developers.
``He's running as hard as he can, sir,'' said Rep. Gene Arnold, R-Nash, the co-chairman of the committee.
The full House had planned to debate the tax bill, but put it off a day because removing the chiropractor provision required that the bill be reprinted.
The Senate, meanwhile, approved its tax credit bill for economic development and sent two bills relating to tax reductions to the budget committee. That indicates the Senate's tax cuts will be included in its budget bill, as they were in the abortive session that ended two weeks ago.
The Senate tax package reduces the sales tax on food and the corporate income tax this year but makes no promises of future reductions, unlike the House plan.
``Nobody is going to pay their 1998 taxes in the next few months,'' said Sen. Tony Rand, D-Cumberland. ``It is not prudent to cut taxes four years out (as the House plan does) when you don't know what the economy is going to do.''
Sen. David Hoyle, D-Gaston, said legislators need to quit playing political games with tax and spending issues.
``It is pure partisan politics,'' he said. ``We are not going to serve the needs of the state unless we put public policy first.''
Senate President Pro Tem Marc Basnight, D-Dare, said senators will respond quickly once the House sends over its budget plan.
``We're ready. We will turn it around in a matter of hours,'' he said. MEMO: TAX REDUCTION PACKAGES
Tax reduction and incentive packages passed by the House and Senate
Tuesday:
House Package
Repeal state sales tax on food over four years.
Reduce corporate income tax rate by 1 percent over four years.
Allow investment tax credit for business property.
Allow 5 percent state credit for research and development expenses
that are eligible for federal credit.
Phase out soft-drink tax over three years.
Reduce state sales tax rate on electricity and piped natural gas used
in farming and manufacturing.
Modify sales tax on cellular phone packages.
Reduce tax paid on items given away as samples.
Reduce inheritance taxes.
Exclude severance pay from individual income taxes.
Expand homestead exemption for elderly poor.
Provide tax incentives for charitable giving.
Senate Package
Allow investment tax credit for business property.
Expand tax credits for job creation.
Offer tax credits for worker training.
Allow state credit for research and development expenses that are
eligible for federal credit.
Repeal tax credit for distributing wine made in state.
Repeal tax credit for dividends from state companies.
Repeal sales tax on donated items.
Repeal most privilege licenses.
Repeal corporate deductions for dividends paid in-state.
Modify qualified business tax credit.
Enact voluntary use tax collection.
Reduce tax paid on items given away as samples.
Reduce sales tax on food from 4 percent to 3 percent.
Reduce corporate tax rate from 7.75 percent to 7.5 percent.
Reduce soft-drink tax by 25 percent.
Repay federal retirees for illegal income tax collections. by CNB