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The Daily Tar Heel

Commission Recommends New Sales Taxes

Gov. Mike Easley appointed the Commission on Efficiency and Loophole Closing in early March to find the money needed to remedy the state's budget shortfall, which has approached $800 million. The panel has identified $177 million in tax loopholes that could be eliminated.

Dan Gerlach, a member of the commission, said the group made suggestions that would not strain the pockets of North Carolina residents but would tax items that had taxed substitutes.

"We think the things we chose were fair," he said. "We're treating like competitors alike."

The commission suggested placing a sales tax on satellite television, state-to-state phone calls, movie theater tickets and vending machine sales.

Presently, items like cable television, in-state phone calls and video rentals have a sales tax added at the register but comparable items do not. "We're making the playing field more level and making like things alike," he added.

If the commission's suggestions are approved, the state's revenue is projected to increase by close to $200 million.

Gerlach said increased taxation was not Easley's first choice to find the needed money but was necessary in light of the budget crisis.

He added that efforts were made before the commission was appointed to find money, mainly through cutting other programs, but a gap still existed.

Gerlach added that the commission did not suggest taxes on everything that could generate revenue for the state. "We're not going to mess with items geared toward economic development like building a factory that creates jobs," he said.

Former N.C. Treasurer Harlan Boyles, also a member of the commission, said he was pleased with the suggestions the commission made.

"I think within the short period of time we worked, we did an incredible job," he said. "I think we made some recommendations that are appropriate for the state and General Assembly to pursue."

Easley spokeswoman Amanda Wherry said that although the commission held its last meeting Friday, members are still making changes to the report that Easley will review sometime within the next couple of weeks.

Wherry said that after the governor reviews and makes changes to the suggestions, the report will be passed on to the General Assembly.

Boyles said he was confident that the General Assembly will approve the report when it is presented. "Their options are quite few," he said. "Time is short and early action is imminent."

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