ROCKINGHAM — A tax break for buyers of mobile and modular homes is in jepoardy after lawmakers in the state Senate kept a sales tax that the state House sought to reduce, Rep. Ken Goodman said Thursday.
An omnibus tax bill being batted back and forth between the chambers is now written to keep a 4.75-percent tax on mobile and modular homes that took effect in 2013. Goodman, D-Richmond, said he supports the House version of the bill, which would have reduced the state sales tax on those homes.
“A 5 percent sale tax puts a burden on modular homes,” said Goodman. “People would go to the bank and can’t get the money. It hurts those buying modular homes and it hurts the modular home business. The House fixed that, but the Senate went back and put it back in.”
The tax bill also sets a $100 limit on municipal privilege license fees — the costs cities and towns charge businesses to operate. Lawmakers in the House passed the bill May 21 and the Senate returned the bill with changes on Thursday.
Goodman said he reluctantly voted for the privilege license cap. House members were given two options, he said: Give cities and towns one year to adjust their privilege license fees or entirely scrap the plan to standardize the rates.
“If we had not concurred, then it would have gone away,” Goodman said. “The prudent thing to do was to compromise and get the municipality this year. I had reservations about it, but it was either give them a year or do away with it now. Maybe we can take that year and come back and fix some things.”
The privilege license cap prevents municipalities from charging any business more than $100 in licensing tax per year. Some cities and towns anticipate large losses in revenue, but the change isn’t likely to have much effect in Rockingham.
City Manager Monty Crump said the city of Rockingham budgeted $13,500 for privilege tax revenues this year. City businesses are rarely charged licensing fees that reach the $100 cap, he said.
“It was initially created for retail,” said Crump. “But then doctors, lawyers and Realtors began seeing it. Now it’s turned into a revenue generator. Most of our businesses, though, fall between $10 and $20, so it doesn’t really affect us.”
The bill contains numerous provisions affecting state and local taxes. Goodman said the revision process had to take place quickly so that occupancy tax changes could take effect before the U.S. Open in Pinehurst next month.
“It was like opening a can of worms,” Goodman said. “They added all these other things while they were at it.”
Reach reporter Matt Harrelson at 910-997-3111, ext. 15.