NC League of Municipalities

Tax Reform Proposal Comparison Chart HB 998 Tax Simplification and Reduction Act -------------------

Contact: Karl Knapp (kknapp@nclm.org) SB 394 Lower Tax Rates for a Stronger NC Economy -------------------

Municipal Tax Change Municipal Privilege Taxes Cap the municipal privilege license tax at $500, but eliminate all business-specific caps and most exemptions. Eliminate municipal privilege license taxes Eliminate municipal beer and wine license taxes Electricity and Natural Gas Eliminate state and local franchise tax on electricity Eliminate state and local franchise tax on natural gas Expand local sales tax to include electricity Expand local sales tax to include natural gas Apply combined general sales tax rate to sales of electricity Apply combined general sales tax rate to sales of natural gas Provide each city with a quarterly Franchise Tax Share distribution of sales taxes on electricity equal to the amount it received for the same quarter during FY 13-14 Distribute 80 percent of local sales tax on piped natural gas collected in a county to cities in that county on an ad valorem basis. Provide each city with a quarterly Franchise Tax Share distribution of sales taxes on natural gas equal to the amount it received for the same quarter during FY 13-14 Provide cities with distribution of the difference between 44% of the State sales tax on electricity and the total Franchise Tax Share for electricity. Funds distributed among cities on a statewide ad valorem basis.

SB 677 NC Fair Tax Act Effective 7/1/15

------------------------------------Effective 1/1/15 Effective 1/1/15 Effective 1/1/15 Effective 1/1/15 -------------------------------------------------------

------------------------------------Effective 7/1/14 Effective 7/1/14 ------------------------------------Effective 7/1/14 Effective 7/1/14 Effective 7/1/14

Effective 7/1/14 Tax periods on or after 5/1/14 Effective 1/1/14 Effective 1/1/14 ------------------Effective 1/1/14 Effective 1/1/14 ------------------Effective 1/1/14

-------------------

-------------------

Effective 1/1/14

-------------------

Effective 7/1/14

-------------------

-------------------

-------------------

Effective 1/1/14

Provisions that will or could reduce revenues for individual municipalities are in red.

NC League of Municipalities

Tax Reform Proposal Comparison Chart HB 998 Tax Simplification and Reduction Act Effective 10/1/13

Contact: Karl Knapp (kknapp@nclm.org) SB 394 Lower Tax Rates for a Stronger NC Economy Effective 1/1/14

Municipal Tax Change Sales Taxes On Services Expand State and local sales tax to admissions to movies, live entertainment, and museums

SB 677 NC Fair Tax Act Effective 1/1/15

Expand State and local sales tax to admissions to games, sports, and fitness activities Expand State and local sales tax to admissions to dining Expand State and local sales tax to alteration, repair, maintenance, cleaning, and installation of tangible personal property (including cars) or service contracts for the same services

Effective 1/1/15 Effective 1/1/15 Effective 1/1/15

------------------------------------Effective 7/1/14

Effective 1/1/14 ------------------Effective 1/1/14

Expand State and local sales tax to real property services and security services Expand State and local sales tax to personal care services, health care services not paid for by insurance, death care services, instructional services, animal care services, travel services, delivery services, information services, transportation services, insurance premiums for property coverage, certain business services, mini-warehousing, storage services, remodeling and specialized construction services for existing structures, site preparations services, and special trade services. Business to business services are not taxed.

Effective 1/1/15 Effective 1/1/15

-------------------------------------

Effective 1/1/14 -------------------

Sales Tax Exemptions Eliminate general sales tax holiday in August Eliminate Energy Star sales tax holiday Eliminate numerous State and local sales tax exemptions

Effective 1/1/15 Effective 1/1/15 Effective 7/1/14

------------------Effective 7/1/13 -------------------

------------------------------------Effective 1/1/14

Provisions that will or could reduce revenues for individual municipalities are in red.

NC League of Municipalities

Tax Reform Proposal Comparison Chart HB 998 Tax Simplification and Reduction Act -------------------------------------------------------

Contact: Karl Knapp (kknapp@nclm.org) SB 394 Lower Tax Rates for a Stronger NC Economy Effective 7/1/15 -------------------------------------

Municipal Tax Change Sales Tax Refunds Eliminate local government sales tax refunds Eliminate economic incentive sales tax refunds Cap the amount of sales tax refund for a nonprofit entity

SB 677 NC Fair Tax Act Effective 7/1/14 Effective 7/1/14 July 1, 2014 - $5 million July 1, 2015 - $1 million July 1, 2016 - $100,000

Sales Tax Rates Eliminate the Article 42 1/2 cent local sales tax Distribute Article 39 and Article 40 local sales taxes 60% point of sale and 40% per capita Beer and Wine Taxes Repeal local distribution from beer and wine taxes Deed Stamp Tax Distribute 10% of the total deed stamp tax collected in a county to the municipalities within the county on a per capita basis.

Effective 1/1/15 Effective 1/1/15

-------------------------------------

-------------------------------------

Effective 7/1/15 -------------------

-------------------------------------

Effective 7/1/14 Immediately

Transitional Hold Harmless Provision Monthly transitional hold harmless payment equal to the difference between the sales taxes 100% reimbursement for FY 14received during a month and 1/12 of the total repealed/altered taxes and tax refunds received 15 and FY 15-16, with the during 2014. percentage decreasing by 10% each year thereafter with no payments starting in FY 25-26

-------------------

-------------------

Provisions that will or could reduce revenues for individual municipalities are in red.