The movement to overhaul North Carolina's 1930's era tax structure gained critical support Tuesday, when a committee of business leaders said it bakced lowering income taxes, but requiring that personal services be taxed.

The bipartisan committee called for lowering the highest marginal rates on corporate and personal income taxes, saying it would make the Tar Heel state more competitive in recruiting new businesses, Rob Christensen reports.

But it also proposed broadening the sales tax to include services that are now exempt — from lawn services to lawyers.

"We want it to be pro business," said John McNairy, president of Tidewater Transit Co. Inc. and co-chairman of the committee said a news conference at a downtown hotel.

The recommendations of the 20-member committee comes at a time when the state legislature is giving a serious look at changing the tax system and facing a $2 biillion plus shortfall this year and a $3 billion shortfall next year.

More after the jump.

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