Survey: No machinery tax

Business leaders could have a new priority on their wish list for N.C. legislators – cut the property tax that manufacturers must pay on equipment and machinery.

Lew Ebert, president of the N.C. Chamber, said at a conference Tuesday that the tax is discouraging manufacturers from investing in their businesses.

“If we want to continue to be a competitive state, we'll have to look at that closely,” Ebert said at a meeting of manufacturers at the Grandover Resort.

Otherwise, Ebert said, “we become the state where old equipment comes to die. That's not the kind of business model you want to be a part of.”

The concern grows out of a poll commissioned by the N.C. Chamber, the largest statewide business lobby in North Carolina.

In a survey of 300 manufacturing executives and owner, respondents cited the tax on machinery more than any other tax when asked which taxes hinder job creation and growth, Ebert said. Close behind were the taxes on motor fuels and real estate, followed by the corporate income tax.

“This kind of data helps us make the case for business in the state capital,” Ebert said.

The issue is not expected to get much traction this year because legislators are nearing agreement on a state budget for the fiscal year that begins July 1. But legislators in Kansas eliminated the tax on new capital spending by businesses when Ebert was head of the Chamber of Commerce there, and he suggested the issue could become a long-term goal of N.C. business leaders.

Like other property taxes, the tax on machinery and equipment is imposed by localities. Cities and counties would need to find spending cuts or another source of revenue if the tax is eliminated.

Other answers to the N.C. Chamber survey painted a gloomy picture of the economy in the short term. Only 9 percent of respondents said their companies were planning major investments. Fifty percent said they were planning minor investments and 38 percent said they were planning none.

The poll also found sentiment for cheaper energy and for discouraging labor unions – signaling two other issues near the top of businesses' agenda.

Statewide, 72 percent of executives and owners said union activity has a negative effect on business, though there was some variation among regions.