H.B. 704
GENERAL ASSEMBLY OF NORTH CAROLINA
Apr 27, 2021
SESSION 2021 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH40399-SVxf-16
Short Title: Local Option Sales Tax Flexibility. (Public)
Sponsors: Representative Howard.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO GIVE COUNTIES ADDITIONAL FLEXIBILITY WITH REGARD TO THE
3 LOCAL OPTION SALES AND USE TAX WITHOUT INCREASING THE EXISTING
4 MAXIMUM TAX RATE.
5 The General Assembly of North Carolina enacts:
6 SECTION 1. Article 46 of Chapter 105 of the General Statutes reads as rewritten:
7 "Article 46.
8 "One-Quarter Cent (1/4¢) or One-Half Cent (1/2¢) County Sales and Use Tax.
9 "§ 105-535. Short title.
10 This Article is the One-Quarter Cent (1/4¢) or One-Half Cent (1/2¢) County Sales and Use
11 Tax Act.
12 "§ 105-536. Limitations.
13 This Article applies only to counties that levy the first one-cent (1¢) sales and use tax under
14 Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, the first one-half
15 cent (1/2¢) local sales and use tax under Article 40 of this Chapter, and the second one-half cent
16 (1/2¢) local sales and use tax under Article 42 of this Chapter.
17 "§ 105-537. Levy.
18 (a) Authority. – A tax levied under this Article must be approved in a referendum. If the
19 majority of those voting in a referendum held pursuant to this Article vote for the levy of the tax,
20 the board of county commissioners may, by resolution and after 10 days' public notice, levy a
21 local sales and use tax at a rate of one-quarter percent (0.25%).the applicable rate. The applicable
22 rate must meet all of the following conditions:
23 (1) It must be in an increment of one-quarter percent (1/4%).
24 (2) It must be at a rate that, if levied, would not result in a total local sales and use
25 tax rate in the county in excess of the following:
26 a. Two and one-half percent (2 1/2%) if the county is authorized to levy
27 a local sales and use tax under Part 6 of Article 43 of this Chapter.
28 b. Two and three-quarters percent (2 3/4%) if the county is authorized to
29 levy, or is located in a special district authorized to levy, a local sales
30 and use tax under Part 2, Part 4, or Part 5 of Article 43 of this Chapter.
31 (b) Vote. – The board of county commissioners may direct the county board of elections
32 to conduct an advisory referendum on the question of whether to levy a local sales and use tax in
33 the county as provided in this Article. The election shall be held in accordance with the
34 procedures of G.S. 163-287, except that the election shall not be held within one year from the
35 date of the last preceding election under this section.
*DRH40399-SVxf-16*
 General Assembly Of North Carolina Session 2021
1 (c) Ballot Question. – The form of the question to be presented on a ballot for a special
2 election concerning the levy of the tax authorized by this Article shall be:
3 "[ ] FOR [ ] AGAINST
4 Local sales and use tax at the rate of one-quarter percent (0.25%) [The applicable rate stated in
5 both words and as a percentage] in addition to all other State and local sales and use taxes."taxes
6 to be used for [the applicable use or uses chosen from the options listed in G.S. 153A-149]."
7 …
8 "§ 105-538. Administration and use of taxes.
9 (a) Administration. – The Secretary shall, on a monthly basis, allocate to each taxing
10 county the net proceeds of the tax levied under this Article. If the Secretary collects taxes under
11 this Article in a month and the taxes cannot be identified as being attributable to a particular
12 taxing county, the Secretary must allocate the net proceeds of these taxes among the taxing
13 counties in proportion to the amount of taxes collected in each county under this Article in that
14 month. For purposes of this Article, the term "net proceeds" has the same meaning as defined in
15 G.S. 105-472.
16 Except as provided in this Article, the adoption, levy, collection, administration, and repeal
17 of these additional taxes must be in accordance with Article 39 of this Chapter. G.S. 105-468.1
18 is an administrative provision that applies to this Article. A tax levied under this Article does not
19 apply to the sales price of food that is exempt from tax pursuant to G.S. 105-164.13B or to the
20 sales price of a bundled transaction taxable pursuant to G.S. 105-467(a)(5a). The Secretary shall
21 not divide the amount allocated to a county between the county and the municipalities within the
22 county.
23 (b) Use. – A county must use the net proceeds of a tax levied under this Article only for
24 one or more of the purposes for which the county may levy property tax under G.S. 153A-149,
25 as indicated on the ballot question presented pursuant to G.S. 105-537(c)."
26 SECTION 2. Part 1 of Article 43 of Chapter 105 of the General Statutes is amended
27 by adding a new section to read:
28 "§ 105-506.3. Rate limitation.
29 A local sales and use tax may only be levied under this Article if the total local sales and use
30 tax rate in the county, including a levy under this Article, is not in excess of the following:
31 (1) Two and one-half percent (2 1/2%) if the county is authorized to levy a local
32 sales and use tax under Part 6 of this Article.
33 (2) Two and three-quarters percent (2 3/4%) if the county is authorized to levy,
34 or is located in a special district authorized to levy, a local sales and use tax
35 under Part 2, Part 4, or Part 5 of this Article."
36 SECTION 3. G.S. 105-164.3(37) reads as rewritten:
37 "(37) Combined general rate. – The sum of all of the following:
38 a. The State's general rate of tax set in G.S. 105-164.4(a)
39 G.S. 105-164.4(a).
40 b. plus the The sum of the rates of the local sales and use taxes authorized
41 for every county in this State by Subchapter VIII Article 39 of this
42 Chapter or Chapter 1096 of the 1967 Session Laws, Article 40 of this
43 Chapter, and Article 42 of this Chapter for every county in this
44 State.Chapter.
45 c. One-half of the maximum rate of tax authorized by Article 46 of this
46 Chapter."
47 SECTION 4. This act is effective when it becomes law.
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Statutes affected:
Filed: 105-164.3
Edition 1: 105-164.3
Edition 2: 105-164.3