North Carolina’s costly mill machinery sales tax is an onerous tax forced upon North Carolina manufacturers and other companies that purchase mill machinery. At a taxation rate of 1 percent of the price of such machinery or $80, per taxed article (whichever is higher), the mill machinery tax continues to burden some of our state’s largest economic contributors. With revenue generation from the tax barely exceeding $50 million annually, while contributing to much higher administrative costs for both businesses and state governments, the tax is a lose-lose proposition for both job creators and state leaders. As the only state in the Southeast to levy such a tax, it’s time to bring North Carolina into alignment with the rest of our region and repeal the mill machinery tax.
As our neighboring states recognized the regressive nature of this unnecessary burden on job creation and took decisive action to remove it, North Carolina must do the same in order to remain competitive. That is why the full repeal of the mill machinery sales tax is a top priority outlined in our 2017 Jobs Agenda. While North Carolina’s tax climate has dramatically improved over the last several years, jumping from the 44th worst to the 11th best tax climate in the nation, there is still more to do in order to strengthen the state’s competitive standing. North Carolina must keep pace with our neighbors on this important component of our tax climate if we hope to continue moving our business tax climate up the competitive leaderboard.
Not only would repealing the mill machinery sales tax make our state more competitive, but doing so was also one of a number of recommendations made in Spreading Economic Opportunity Across North Carolina. This study, commissioned by the NC Chamber Foundation last year, examined the economic opportunities in parts of our state that have lagged behind in recent decades and offered solutions to expand those opportunities and bolster growth. As the North Carolina legislature weighs a repeal of this tax through this year’s budgetary process, it’s important that they remember repealing the mill machinery tax will improve our state’s competitiveness in every region.
For more information on the tax priorities we are pursuing as part of the Jobs Agenda, contact Jason Soper, director of governmental affairs at the NC Chamber.
Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber