Democrat Walter Dalton said his first budget proposal if elected will not include a sales tax increase to better fund education, an apparent shift on a key issue in the governor’s race.
But at the same time, Dalton refuses to rule out a sales tax increase if elected.
“What I have always said is (that) I don’t like the cuts to education; it wasn’t about embracing the tax,” Dalton said in an interview Thursday. “But it was a way to resolve it, and I supported the extension of three-quarters-of-a-penny sales tax to get us through the tough times.”
Dalton advocated for a tax increase earlier this year as he campaigned for the Democratic primary nomination.
First proposed by Gov. Bev Perdue and legislative Democrats, the sales tax increase would have provided an extra $850 million a year to public education amid spending cuts in the Republican-crafted state budget. Dalton saw it as an “extension” of the 1-cent sales tax levy that expired last year.
His pivot is designed to nullify a key attack point used by Republican rival Pat McCrory against the lieutenant governor. Earlier this month, McCrory blasted Dalton, saying he “agrees with Beverly Perdue and … he wants to increase the sales tax in North Carolina – on you – by 15 percent.”
Dalton disputes that he is changing his position, saying the tax increase he supported applied only to the budget for the current fiscal year.
The tax increase Perdue advocated never included a sunset date. “In my mind, it was always clear” it would be a one-year tax, Dalton said.
Even though Dalton still believes his reasons for the tax increase – tough economic times and low education funding – still exist, he said his forthcoming education plan won’t require an increase in the sales tax.
He began making his no-sales-tax pitch in recent town halls, but the shift received little attention until this week. Instead, Dalton has focused on his opponent’s tax plan.
McCrory has always opposed an extra sales tax for education. The former Charlotte mayor says he’d rather reduce personal and corporate income taxes.
But Dalton insists that McCrory’s plan would shift the burden to consumption taxes, such as a tax on food or services.
“He has talked about the redistribution of the tax burden we now have,” Dalton said of McCrory, suggesting the elderly and middle class would be unfairly hurt by his rival. “His plan would absolutely kill small businesses.”
In an interview Thursday, McCrory said he would develop a bipartisan plan to overhaul the entire tax code without a net tax increase. “I think what we need to do is spread out the burden to help equalize the fairness to everyone and not put the burden on the producer and the small business person like it is now,” he said.
But McCrory, too, is open to criticism because his tax plan is void of major details – meaning voters don’t know how he would handle their taxes if elected.
To reduce and eventually eliminate personal and corporate income taxes, McCrory most likely would need to cut state spending or increase other taxes. He refused to identify any particular cuts or taxes but says he will look for unspecified spending efficiencies.
“I’m not going to negotiate the specific bill at this point in time,” he said.
McCrory pounced on Dalton’s new talk on sales tax, labeling it disingenuous and linking it to his former rival in the 2008 campaign. “Just recently (he) was on the campaign trail saying we ought to increase the sales tax 15 percent,” he said. “Now as it gets close to the election he, like Governor Perdue, is saying another thing.”