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Senate Democrats have their tax plan ready.

According to a document received by the Associated Press, the Senate Finance Committee will consider a proposal today that would reduce the sales tax rate but expand the services it covers, repeal the food tax and raise sin taxes.

The plan would raise $600 million a year, more than the $500 million in revenue missing from the Senate budget passed earlier this month.

Under the plan:

* The sales tax rate in most counties would drop from 6.75 percent to 6 percent.

* The sales tax would be expanded to cover moving services, building repairs and downloaded music.

* Corporate and individual income tax rates would go down.

* The 2 percent tax on food at grocery stores and other retailers would be repealed.

* The cigarette tax would be increased 15 cents per pack.

* The alcohol excise tax would be increased.

The House is also expected to put together its own proposals for modernizing the tax code.

Rep. Grier Martin
Raleigh Democrat
Third Term

What two things would you cut in the state budget? The legislature will trim fat but "we'll be trimming plenty of muscle too, unfortunately."

Are there any taxes you would be in favor of increasing? "I'm open to the idea of an increase in the cigarette tax if it was with the intent to get people to quit smoking." Alcohol tax increase? "Everything's on the table."

— Mark Johnson

Rep. Martha Alexander
Charlotte Democrat
Ninth Term

What two things would you cut in the state budget? "Until I take a look at the budget, I don't believe I can respond to that question at this time. I think people will be looking clearly to see if there are any duplication of services."

Are there any taxes you would be in favor of increasing? "I would personally be in favor of raising the alcohol taxes and the cigarette taxes but with the caveat that some of the money raised be used for (prevention and treatment) services in the field." She added the tax increases would also reduce usage, particularly among teenagers and young adults.

— Dan Kane 

Gov. Mike Easley proposed a $21.5 billion budget Monday that would raise taxes on cigarettes and alcohol to help pay for teacher raises and mental health reform.

Easley's budget, a 4.2 percent increase from the previous year, would add a 4 percent tax to beer and wine and a 4 percent tax to liquor to pay for a $68 million fix to the state's failing mental health system.

Easley would raise the tax on cigarettes from 35 cents to 55 cents per pack to pay for public school teacher raises that would average 7 percent. Administrators would receive a 6 percent raise.

This is Easley's last budget proposal. He is prohibited by law from seeking a third term. He has said a major goal of his last year is to get teacher pay up to the national average.

Pay increases would be given at a higher rate for newer teachers, said Dan Gerlach, a senior budget advisor to Easley.

"We all have to keep in mind this is a salary that is going to have to continue to grow if we want a quality education across the nation," Easley told reporters Monday morning.

More after the jump.