Could your next hair cut be taxed?

Reported by Lynda Figueredo - bio|email
Posted by Debra Worley - email

WILMINGTON, NC (WECT) - Some lawmakers in Raleigh want to overhaul the tax system by lowering some of the rates we pay in sales tax, but add new taxes on services that don't charge the extra fees right now.

"You're talking about taxing labor that has never been done before business are already hurting now your talking about costing the consumer more money," said Carl Brewer who works at Black's Tire and Auto Service.

Right now you don't have to pay a sales tax for servicing your car, but if the new tax rate is approved, you may have to start paying for those types of services.

Senators have not identified where the sales tax would expand, but some possible services that could be taxed include grooming your dog or even going to the gym.

Some residents said they would rather see the government increase sales tax instead of having pay taxes on services like a haircut.

The Senate Finance Committee reviewed a proposal that would lower sales tax rate from 6.75 percent to 6 percent.  In addition, corporate and individual income tax rates would decrease.

The proposal also includes a 15 cent-per-pack increase on cigarettes and an alcohol tax, to help narrow the expected budget shortfall of more than $3 billion.

Senate Republicans are not in support of the plan, saying it won't cover the budget shortfall.

If passed, the plan would help the state generate more than $600 million by next year.

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