Easy money, but hard to collect
Tuesday, November 29th, 2005
By Chris Fitzsimon
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When North Carolina’s most recent legislative session opened in January, lawmakers projected a budget hole of nearly $1 billion. That shortfall set the tone for the entire session, as legislators, lobbyists and pundits spent considerable time wringing their hands over how to fill the gap, either with new revenue or sizable spending cuts.
In the end, the revenue problem was less acute than predicted. Higher-than-anticipated tax receipts reduced the shortfall. The General Assembly ultimately trimmed Medicaid spending and held over two taxes set to sunset, in addition to taking other, lower-profile cuts and hikes.
One massive, untapped resource was largely unavailable to legislators because of a quirk in federal law, but that could change in the not-so-distant future.
Like many states, North Carolina fails to collect the vast majority of Internet sales tax receipts that it’s owed. The National Conference of State Legislatures estimates that states miss out on a total $8.9 billion annually in Web sales tax revenue. (more…)
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