Last year, the Republican-led General Assembly expanded the sales tax base to require certain events to collect the tax on admissions.
Last week, the state House narrowly voted to exempt one such event, county agricultural fairs, from collecting the tax. The issue exposed a rift among House Republicans: those who wanted to help the small organizations that run the fairs and those who didn’t want to set the precedent of repealing parts of last year's major tax overhaul.
Republican Rep. Bryan Holloway of King, one of several bill sponsors, argued that the state should relieve the events from the burden of collecting and submitting the tax. “These fairs need to stick around, and they’re a big, big deal for our small communities,” he said. But some top Republicans, including Reps. Julia Howard of Mocksville and David Lewis of Dunn, who helped draft last year’s tax reform legislation, opposed the measure.
“This is the beginning of unraveling all of the hard work that you did last year,” Howard said. Exempting the fairs from the tax would cost the state an estimated $400,000 a year.
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The bill passed 60-54, with Republicans and Democrats voting on both sides. A final House vote is expected next week, and Rep. Becky Carney, a Charlotte Democrat, said she planned to sponsor an amendment to exempt more organizations from collecting taxes at their events, including arts, cultural and historical groups.
That played directly into Republican concerns that exempting one type of event would lead to other exemptions, which last year’s tax legislation attempted to eliminate from the tax code. The bill would still have to go through the Senate, where it may face a tough road.