Service taxes fall on blue collars

North Carolina lawmakers are considering taxing a broad variety of everyday services. You could pay more for a haircut, a pedicure, a clutch replacement or getting your yard mowed. But the services of accountants, lawyers and other white-collar workers would be exempt.

To help patch the $4.7 billion hole in the budget, the legislature has proposed expanding the sales tax to cover things such as repairs at Al's Garage in Chapel Hill. That doesn't please Al Townsend, the owner.

With the garage charging $75 an hour for labor, a sales tax of at least 4 percent could cost consumers dozens of dollars more for routine maintenance. "It's certainly not going to help this industry's recovery," Townsend said.

A 4.5 percent state sales tax already applies to all goods and about 30 different types of services, including equipment rental and printing, among others. Both the House and the Senate have proposed expanding the tax to about 50 services including storage, entertainment, personal services, installations, repairs and maintenance.

Lawmakers have also proposed taxing a variety of other items, including digital purchases and electricity. In total, the Senate's most recent plan would raise about $1 billion in the next fiscal year and $1.4 billion the following year. (N&O)