Scotland County voters will decide on proposed sales tax hike. Here’s what to know

By Ben Rappaport

benrappaport@borderbelt.org 

When Scotland County voters cast their ballots in November, they will decide whether to increase the local sales tax. 

If the ballot measure passes, the local sales tax will increase by one-fourth of a cent, from 6.75% to 7%, on most purchases, including restaurants and clothing. It would not apply to gasoline, groceries and medicine. 

Local officials say the change would generate about $1 million in additional revenue each year. Scotland County commissioners, who are responsible for approving a budget, faced a $4.3 million shortfall for the fiscal year that began July 1. To balance the budget, they made widespread cuts, implemented a hiring freeze, nixed cost-of-living raises and eliminated salary increases for long-term county employees. 

A general sales tax increase cannot be explicitly tied to a project, but officials say the increased revenue would allow the county to start hiring again and give employees a boost in pay. 

A sales tax referendum might be a tough ask in Scotland County, which has the highest property tax rate in the state at 99 cents per $100 of valuation. To raise $1 million in additional annual revenue through a property tax hike, the county would have to raise the rate by about 4 cents. 

“We think it can be a relief to our property tax payers by developing an income above what we already get,” Tim Ivey, chairman of the Scotland County Commissioners, said of a sales tax hike. “It’ll also put us more in line with our surrounding counties.”

Cumberland, Moore and Robeson counties all have a 7% local sales tax. Nearby Bladen and Columbus counties have a 6.75% sales tax, according to the North Carolina Department of Revenue.

Scotland County’s money problems are largely due to the loss of pandemic-era federal and state funds, according to local officials. That includes the American Rescue Plan, which dried up at the end of last fiscal year. 

Scotland County officials hope the sales tax increase would capture revenue from visitors and not place the burden on local residents the way a property tax hike would. Laurinburg, the county seat, has seen a flurry of new retail stores and restaurants. 

“We’re right off of (U.S.) 74 and we’re seeing that traffic increase,” said Scotland County Manager April Snead. “This is a good way to not put all the burden on our citizens through property tax, but to increase revenue in a different way.”

Alexandra Sirota, director of the nonprofit North Carolina Budget & Tax Center, said increasing the sales tax would only provide a stopgap measure for the county’s finances. While a higher sales tax would help balance the budget for a few years, she said, state lawmakers should provide more support for poor, rural counties like Scotland.

Ivey agreed the measure was a “Band-Aid solution.” A sales tax increase can only raise a finite amount of money and does not account for rising costs of delivering services, according to research from the Budget & Tax Center.

Data shows the state has an “upside-down” tax code, Sirota said. “People with the lowest incomes have to pay the greatest portion of their income in state and local taxes, while the richest North Carolinians pay the smallest portion of their incomes.”

Sirota said a sales tax increase disproportionately affects middle- and low-income residents because they spend a larger share of their income than wealthy residents on things like fast food and clothing. The richest 1% of North Carolinians — those who make about $697,000 per year — spend 1.1% of their income on state and local sales taxes, according to the nonprofit Institute on Taxation and Economic Policy. The poorest 20% — those who make less than $22,000 per year — spend about 6.6% of their income on the taxes.  

“Anytime I hear about a sales tax increase, I think about what the impact is going to be on everyday North Carolinians,” Sirota said. “All the while seeing that the very wealthy and profitable corporations in our state are getting tax breaks year after year.”

She said she understands the need to levy a higher sales tax because local governments are being asked to do more with less support from the state. 

“Scotland County has to look to its neighbors and say, ‘How do we deliver a quality of life on par with our neighbors?’” Sirota said. “The tools they have been given are not adequate to meet the needs.” 

Snead said she understands that a tax increase of any kind can sound like a negative for residents, but she is optimistic the measure will pass in November. “No one likes to pay taxes,” she said. “But it’s a few cents, and residents are probably not going to notice the difference. It really adds up to great revenue for us.” 

Scotland County voters rejected a proposed sales tax increase in 2018. Commissioner John Alford, a Democrat who supports increasing the tax, said he is more hopeful this time around.

“Last time I don’t think we got the word out,” Alford said. “But now I think we have made people aware and I hope they see the benefits this will have on all residents.”

The county has been marketing the benefits of the increased sales tax through social media videos, mailed flyers and other marketing materials. All the county commissioners — four Democrats and three Republicans — support increasing the tax and voted unanimously to add the measure to the ballot. Snead said that each current commissioner will appear in a video touting the benefits for their district. 

Four commission seats are up for grabs in the Nov. 5 election. Three people — Democrat Daniel Jermaine Dockery, Libertarian Samuel Levinson and Republican Ed O’Neal — are vying for the at-large seat vacated by Whit Gibson, a Republican who is not seeking re-election. 

Incumbent John Alford, a Democrat who wants to keep his Laurel Hill Township seat, is challenged by Republican Tanya Edge. Incumbent Democrat BJ Gibson is challenged by Republican Jeff Shelley for the Williamson District seat. 

Clarence McPhatter, an incumbent Democrat, is running unopposed for a Stewartsville Township seat. 

O’Neal said he’d support the measure because he sees a need for additional revenue in the county. “Yes, I’m a Republican and I don’t love tax increases, but this is not about party,” he said. “We need to be pragmatic and this is a great way to create revenue in a relatively painless way.”

Other challengers in the races did not return phone calls from the Border Belt Independent

Ivey said he hopes the education efforts will be successful in November.

“The way I convince most people about this is that this is going to be spread out evenly,” he said. “It really becomes a net benefit.”