Democrats nearing deal on raising taxes

RALEIGH (Winston-Salem Journal) - N.C. House and Senate Democrats closed in yesterday on a deal to generate about $1 billion in new taxes this year that they said would raise both sales and income taxes but avoid subjecting a host of services to the sales tax.

Leaders in both chambers said they had a deal in principle on how to raise the revenues more than five weeks after negotiations first began. Finding such a deal has been the key obstacle to passing a permanent state government budget for the next two years that began July 1.

"We think it's time to get an agreement and finish this off," House Speaker Joe Hackney, D-Orange, said after a caucus of House Democrats.

Though percentages and numbers are subject to change, the plan being completed would raise the sales tax most consumers pay from 6.75 percent to as much as 7.75 percent.

It also would place a 2 percent surcharge on all individuals and corporations that have an income-tax bill for the next two years, according to Sen. Clark Jenkins, D-Edgecombe, one of the tax negotiators. For example, a $1,000 tax bill would go up to $1,020.

The tax on cigarettes also would go up by as much as 15 cents a pack to 50 cents and taxes on beer, wine and liquor would go up, Jenkins said.

The sales tax would rise to 7.5 percent only if the House agrees to a Senate offer to raise taxes on electricity and natural-gas sales. Democrats in both chambers were expected to meet today behind closed doors to discuss what combinations they would accept.

"We're getting close to getting this worked out," Sen. David Hoyle, D-Gaston, said after a meeting with House negotiators. "We are along the same lines."

House and Senate tax negotiators have been at loggerheads as both sides offered proposals based on very different philosophies on how to help narrow a budget gap for this year that Democrats pegged at $4.7 billion.