GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 1181

Short Title:  Republican Tax Cuts.	(Public)
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Sponsors: Representatives Balmer; Arnold, Barbee, Berry, Brawley, Creech, Culp, Decker, Dockham, Edwards, Esposito, Flaherty, Gardner, Grady, Hayes, Holmes, Ives, Lemmond, McCombs, Miner, Mitchell, Morgan, Nichols, J. Preston, Robinson, Tallent, G. Thompson, C. Wilson, and Wood.
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Referred to:  Finance.
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April 20, 1993

A BILL TO BE ENTITLED
AN ACT TO PHASE OUT THE STATE SALES TAX ON FOOD, TO PROVIDE A UNIVERSAL CHILD CARE TAX CREDIT FOR THE PARENTS OF CHILDREN UNDER AGE SIX, AND TO LOWER THE CORPORATE INCOME TAX TO SEVEN PERCENT.
The General Assembly of North Carolina enacts:
TABLE OF CONTENTS
I. PHASE OUT FOOD TAX
II. UNIVERSAL CHILD CARE CREDIT
III. REDUCE CORPORATE INCOME TAX
IV. EFFECTIVE DATES
Part I.
PHASE OUT FOOD TAX
Section 1. (a)	Effective July 1, 1993, G.S. 105-164.4(a) is amended by adding a new subdivision to read:
"(1e)	The following rates apply to the sales price of food that would be exempt from the tax imposed by this Article if it were purchased with coupons issued under the Food Stamp Program, 7 U.S.C. § 51:
Effective Dates	Rate
July 1, 1993, through June 30, 1994 – three percent (3%)
July 1, 1994, through June 30, 1995 – two percent (2%)
July 1, 1995, through June 30, 1996 – one percent (1%)."
(b)	Effective July 1, 1996, G.S. 105-164.4(a)(1e), as enacted by this section, is repealed.
Sec. 2.  Effective July 1, 1996, Article 5 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-164.13B. Food exempt from State tax only.
The taxes imposed by this Article do not apply to food that is not otherwise exempt pursuant to G.S. 105-164.13 but would be exempt pursuant to G.S. 105-164.13 if it were purchased with coupons issued under the Food Stamp Program, 7 U.S.C. § 51."
Sec. 3.  Effective July 1, 1993, G.S. 105-465 reads as rewritten:
"§ 105-465.  County election as to adoption of local sales and use tax.
The board of elections of any county, upon the written request of the board of county commissioners thereof, or upon receipt of a petition signed by qualified voters of the county equal in number to at least fifteen percent (15%) of the total number of votes cast in the county, at the last preceding election for the office of Governor, shall call a special election for the purpose of submitting to the voters of the county the question of whether a one percent (1%) sales and use tax as hereinafter provided will be levied.
The special election shall be held under the same rules and regulations applicable to the election of members of the General Assembly. No new registration of voters shall be required. All qualified voters in the county who are properly registered not later than 21 days (excluding Saturdays and Sundays) prior to the election shall be entitled to vote at said election. The county board of elections shall give at least 20 days' public notice prior to the closing of the registration books for the special election.
The county board of election shall prepare ballots for the special election.  The question presented on the ballot shall be 'FOR one percent (1%) local sales and use tax on items subject to State sales and use tax at the general State rate and on food' or  'AGAINST one percent (1%) local sales and use tax on items subject to State sales and use tax at the general State rate and on food'.
The county board of elections shall fix the date of the special election; provided, however, that the special election shall not be held on the date of any biennial election for county officers, nor within 60 days thereof, nor within one year from the date of the last preceding special election under this section."
Sec. 4.  Effective July 1, 1993, G.S. 105-467 reads as rewritten:
"§ 105-467.  Scope of sales tax.
The sales tax that may be imposed under this Article is limited to a tax at the rate of one percent (1%) of the following:
(1)	The sales price of tangible personal property subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(1) and (a)(4b).
(2)	The gross receipts derived from the lease or rental of tangible personal property when the lease or rental of the property is subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(2).
(3)	The gross receipts derived from the rental of any room or other accommodations subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(3).
(4)	The gross receipts derived from services rendered by laundries, dry cleaners, and other businesses subject to the general rate of sales tax imposed by the State under G.S. 105-164.4(a)(4).
(5)	The sales price of food that is not otherwise exempt from tax pursuant to G.S. 105-164.13 but would be exempt from the State sales and use tax pursuant to G.S. 105-164.13 if it were purchased with coupons issued under the Food Stamp Program, 7 U.S.C. § 51.
The sales tax authorized by this Article does not apply to sales that are taxable by the State under G.S. 105-164.4 but are not specifically included in subdivisions (1) through (5) of this section.
The State exemptions and exclusions contained in G.S. 105-164.13 and the State refund provisions contained in G.S. 105-164.14 apply to the local sales and use tax authorized to be levied and imposed under this Article.  A taxing county may not allow an exemption, exclusion, or refund that is not allowed under the State sales and use tax.
The local sales tax authorized to be imposed and levied under this Article applies to taxable transactions by retailers whose place of business is located within the taxing county.  For the purpose of this Article, the situs of a transaction is the location of the retailer's place of business."
Sec. 5.  Effective July 1, 1993, G.S. 105-468 reads as rewritten:
"§ 105-468.  Scope of use tax.
The use tax authorized by this Article is a tax at the rate of one percent (1%) of the cost price of each item or article of tangible personal property that is not sold in the taxing county but is used, consumed, or stored for use or consumption in the taxing county.  The tax applies to the same items that are subject to tax under G.S. 105-467.
Every retailer who is engaged in business in this State and in the taxing county and is required to collect the use tax levied by G.S. 105-164.6 shall collect the one percent (1%) use tax when the property is to be used, consumed, or stored in the taxing county. The use tax contemplated by this section shall be levied against the purchaser, and the purchaser's liability for the use tax shall be extinguished only upon payment of the use tax to the retailer, where the retailer is required to collect the tax, or to the Secretary of Revenue, or to the taxing county, as appropriate, where the retailer is not required to collect the tax.
Where a local sales or use tax has been paid with respect to tangible personal property by the purchaser, either in another taxing county within the State, or in a taxing jurisdiction outside the State where the purpose of the tax is similar in purpose and intent to the tax which may be imposed pursuant to this Article, the tax paid may be credited against the tax imposed under this section by a taxing county upon the same property.  If the amount of sales or use tax so paid is less than the amount of the use tax due the taxing county under this section, the purchaser shall pay to the Secretary of Revenue or to the taxing county, as appropriate, an amount equal to the difference between the amount so paid in the other taxing county or jurisdiction and the amount due in the taxing county.  The Secretary of Revenue or the taxing county, as appropriate, may require such proof of payment in another taxing county or jurisdiction as is deemed to be necessary.  The use tax levied under this Article is not subject to credit for payment of any State sales or use tax not imposed for the benefit and use of counties and municipalities.  No credit shall be given under this section for sales or use taxes paid in a taxing jurisdiction outside this State if that taxing jurisdiction does not grant similar credit for sales taxes paid under this Article."
Sec. 6.  Effective July 1, 1993, the first paragraph of Section 4 of Chapter 1096 of the 1967 Session Laws, as amended, is amended as follows:
(1)	By deleting the word "and" before subdivision (4).
(2)	By changing the period at the end of subdivision (4) to a semicolon and adding the word "and".
(3)	By adding a new subdivision to read:
"(5)	The sales price of food that is not otherwise exempt from tax pursuant to G.S. 105-164.13 but would be exempt from the State sales and use tax pursuant to G.S. 105-164.13 if it were purchased with coupons issued under the Food Stamp Program, 7 U.S.C. § 51."
Sec. 7.  Effective July 1, 1993, Section 5 of Chapter 1096 of the 1967 Session Laws is amended by deleting the first sentence of that section and substituting the following sentences to read:
"The use tax that Mecklenburg County may impose under this division is a tax at the rate of one percent (1%) of the cost price of each item or article of tangible personal property that is not sold but is used, consumed, or stored for use or consumption in Mecklenburg County.  The tax applies to the same items that are subject to tax under Section 4 of this act."
Sec. 8.  Approval under Article 39, 40, or 42 of Chapter 105 of the General Statutes, or under the Mecklenburg County Sales and Use Tax Act, Chapter 1096 of the 1967 Session Laws, as amended, of local sales and use taxes on items subject to State sales and use tax at the general State rate constitutes approval of local sales and use taxes on food.
Part II.
UNIVERSAL CHILD CARE CREDIT
Sec. 9.  Division II of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.11A.  Universal child care credit.
(a)	There is allowed as a credit against the tax imposed by this Division an amount equal to two hundred sixty dollars ($260.00) for each of a taxpayer's children under the age of six that the taxpayer claims as a dependent under section 151 of the Code for the taxable year.  For the purpose of this section, a taxpayer's child includes the taxpayer's daughter, stepdaughter, son, or stepson.
(b)	The credit allowed by this section may not exceed the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowable, except for payments of tax by or on behalf of the taxpayer.  A taxpayer who is eligible for the credit allowed under this section is not eligible for the credit allowed under G.S. 105-151.11."
Sec. 10.  G.S. 105-151.11(e) reads as rewritten:
"(e)	No credit shall be allowed under this section with respect to employment-related expenses paid by a nonresident of this State.  A taxpayer who is eligible for the credit allowed under G.S. 105-151.11A is not eligible for the credit allowed under this section."
Part III.
REDUCE CORPORATE INCOME TAX
Sec. 11.  G.S. 105-130.3 reads as rewritten:
"§ 105-130.3.  Corporations.
A tax is imposed on the State net income of every C Corporation doing business in this State at seven percent (7%) of the corporation's State net income.  An S Corporation is not subject to the tax levied in this section."
Sec. 12.  G.S. 115C-546.1 reads as rewritten:
"§ 115C-546.1.  Creation of Fund; administration.
(a)	There is created the Public School Building Capital Fund.  The Fund shall be used to assist county governments in meeting their public school building capital needs.
(b)	Each calendar quarter, the Secretary of Revenue shall remit to the State Treasurer for credit to the Public School Building Capital Fund an amount equal to one-fourteenth (1/14) of the net collections received during the previous quarter by the Department of Revenue under G.S. 105-130.3 minus two million five hundred thousand dollars ($2,500,000).  All funds deposited in the Public School Building Capital Fund shall be invested as provided in G.S. 147-69.2 and G.S. 147-69.3.
	(c)	The Fund shall be administered by the Office of State Budget and Management."
Part IV.
EFFECTIVE DATES
Sec. 13.  Part I of this act becomes effective July 1, 1993, and applies to sales made on or after that date.  Part II of this act is effective for taxable years beginning on or after January 1, 1993.  Section 12 of Part III of this act becomes effective October 1, 1993, and applies to remittances made on or after that date; the remainder of Part III of this act is effective for taxable years beginning on or after January 1, 1993.