Should Harry and David pay taxes in North Carolina?

Right now, if you order a gourmet gift basket as a holiday present over the Internet or through a catalog from the Oregon-based retailer or other out-of-state companies, you don't pay North Carolina sales tax.

House Speaker Joe Hackney would like to change that.

Since the late 1990s, North Carolina and other states have worked to streamline their sales taxes — often a hodgepodge of different rules and confusing legal language — into a more uniform system.

(Dome readers may recall this was the reason for the 2003 soda tax hike.)

More uniform rules would make it easier for states to collect sales taxes from transactions handled in other states. But since the tax collection would go across state lines, it needs Congressional approval.

Hackney said he will talk to U.S. House Speaker Nancy Pelosi this afternoon about granting states the rights to interstate sales tax collection. He said it would bring in an additional $400 to $500 million a year for North Carolina's state budget, especially helpful given the current budget crunch.

"It's a tax that is already on the books, so it is not a new tax," he said. "It's just collecting the one that's there."

Correction: Harry and David pay taxes in North Carolina after all. See a complete explanation here. 

A "sin tax" on booze and cigarettes did not make it into the 2003 budget.

But another tax hike — a venial sin tax? — on soda was included in the final budget at the behest of Senate budget writers, including Sen. Kay Hagan. A higher tax on candy made it into the 2005 budget.

The increase was part of a multi-state effort started in the late 1990s to make the sales tax more uniform in the hopes of getting online and catalog retailers to charge it.

At the time, North Carolina treated candy and soda differently based on where they were sold.

If you bought a bag of M&Ms at the 7-Eleven to eat immediately, you paid state and local sales tax since it was basically considered junk food. If you bought a larger bag to, say, pack in your kid's lunchbox, you only paid a local sales tax, since it was considered a grocery item.

To streamline the tax, legislators had to choose whether to charge the state sales tax on all candy and soda, or leave it all at the local rate.

"You had to treat it all the same," explained state sales tax director Andy Sabol.

More after the jump.

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