State lawmakers are considering ending the sales tax exemption for tickets to the State Fair, youth athletic contests and some nonprofit events.
The measure is tucked inside draft legislation designed to make fixes to the massive tax overhaul approved earlier this year. Republican lawmakers leading the effort Tuesday said ending the exemptions is necessary to make the tax code simpler.
Under the draft bill, admission tickets to agricultural fairs, youth sports, state museums and attractions and some events organized by nonprofits would be subject to the 4.75 percent state sales tax.
The sweeping tax measure approved by state lawmakers in July added sales tax to live entertainment, movies and amusement tickets but left these four categories exempt from the sales tax.
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State revenue officials told lawmakers in October that the exemptions created confusion about what is exempt, and Republican leaders moved to eliminate the tax breaks.
“We have agreed that exemptions create confusion,” said state Rep. Tim Moffitt, an Asheville Republican.
The Revenue Laws Committee may vote on the draft bill as early as its Dec. 10 meeting. But not all committee members support the new language. Democrat Becky Carney of Charlotte said she is concerned how it may affect nonprofit groups. Republican state Sen. Pete Brunstetter is similarly hesitant.
The draft bill for consideration next year would only leave exemptions for events held by elementary, middle and high schools and all-volunteer nonprofits that meet certain restrictions. It would take effect Oct. 1.
It’s unclear how much revenue would be generated by adding sales tax to these new categories. But the sales tax on live entertainment and movies is expected to generate about $16.5 million for the state in fiscal year 2015.
Other provisions in the draft legislation are aimed at clarifying other parts of this year’s big tax bill:
• The new sales tax on entertainment tickets only applies to those that initially go on sale in 2014. But all tickets after Jan. 1, 2015, will carry the new tax.
• The new tax law ends the sales tax exemption on newspapers, and the draft legislation makes sure it also applies to those sold in vending machines.
• The $20,000 cap on mortgage deductions will apply collectively to married couples who file separately.
• The new tax law ended the sales tax exemption for university meal plans, and the draft makes sure it applies to those sold by third-party contractors.