Remember the high-powered tax reform panel appointed last year that was finally going to make the long overdue changes in the tax code?  It was created with a lot of fanfare and promises and it still might deliver, but it is time to start wondering.

The State and Local Fiscal Modernization Study Commission is supposed to make recommendations to the 2008 General Assembly, which convenes in May.  Not much has been heard from the Commission lately.  If the Commission or its subcommittees have been meeting, it is not reflected on the General Assembly website for the public to see.

The last meeting listed was last spring and the news coverage of the commission and tax reform overall has been rare.

It all reinforces the view of skeptics who point to a pile of reports on tax reform from other celebrated commissions that sit on the shelves in the legislative library, most of their recommendations ignored.

And it’s also hard to imagine any major tax changes in an election year, prompting many legislative observers to predict that any significant changes will have to wait until the new governor takes office in January of 2009.

The committee’s work is important.  The state’s tax system was created early in the last century and does not reflect the way the economy works 80 years later. There’s always plenty of acrimony over tax changes, but there is consensus this time across the political and ideological spectrum that the tax code needs a complete overhaul.

Most analysts also agree that the most fundamental problem is that the state’s revenue stream relies too much on taxing sales of products and ignoring services, which are increasingly a larger share of the state’s economic activity.

The presumption is that the sales tax could be lowered if services were also taxed and even if the overall effect was revenue neutral, the tax base would be far more likely to grow along with the state’s economy, providing a more stable revenue base to pay for education, human services, and other state services.

Despite that consensus about the need to broaden the sales tax, there seems to be little appetite to take on the special interests that would pull out all the stops to prevent their services from being taxed.

Some legislative leaders still occasionally mention the latest incarnation of a tax reform panel, but time alone may seal its fate for the foreseeable future.  If that wasn’t enough, legislative leaders who are part of the commission continue to push for changes in the state’s tax code that would make comprehensive reform even more unlikely.

Senator David Hoyle is one of the Co-Chairs of the Commission and is also one of the Chairs of a legislative study of the state’s policy on business incentives. Hoyle told Freedom Newspapers this week that he wants the incentive study committee to look at eliminating the corporate income tax.

That understandably prompted Rep. Jennifer Weiss, also a Co-Chair, to worry that incentives might continue after the tax was reduced or eliminated.

Last session lawmakers cut taxes on the richest 60,000 taxpayers in North Carolina. Now Senator Hoyle wants to consider eliminating the corporate income tax entirely, ignoring the work of the tax reform commission he also heads.

Unless things change pretty soon, the end result of the Modernization Commission might be to cut taxes on corporations and the wealthy and to add to that stack of reports in the legislative library.  Somebody needs to speak up now for a different plan.

Governor Mike Easley and legislative leaders ought to recommit themselves to supporting the tax reform commission and they could start by declaring any specific tax cuts off the table until the commission presents its final recommendations for fair and comprehensive tax reform to the General Assembly.