Frequently Asked Questions about the Quarter Cent (1/4¢) Sales and Use Tax
- Who put this issue on the ballot?
- What will these funds be used for?
- Will the areas identified for funding be permanent or change?
- How much money will be raised through this tax?
- How does this compare to property taxes?
- Are there items exempt from the sales tax?
- Has the sales tax referendum been on ballots in other counties?
- What is the current tax rate for Orange and adjacent counties?
- If the sales tax passes does it mean property taxes will not be increased?
- How much will the Sales and Use Tax cost?
- How is a sales tax different from property tax?
- What is the voting procedure?
- If I vote a straight ticket will the sales tax be covered?
- Will the tax be permanent or will it have a sunset provision?
The NC General Assembly granted county boards of commissioners the authority to levy, subject to voter approval, an additional one-quarter cent (1/4¢) county sales and use tax. On June 21, 2011, the Board approved a resolution calling for a November 8, 2011 Special Advisory Referendum concerning the Levy of a One-Quarter Cent (1/4¢) County additional Sales and Use Tax.
The Board of Commissioners resolved in a June 21, 2011 resolution to designate funds raised through the Article 46 one-quarter cent (1/4¢) sales and use tax for the next ten years as follows:
- Schools - 50% of the funding will be allocated in an equitable manner between the County’s two school systems, based on the Average Daily Membership of each school system, for the dedicated purpose of funding capital projects, including but not limited to facility improvements at ‘older’ schools and the procurement of technology. The Board requests that each school system furnish the Board of Commissioners with a detailed list of prioritized projects that could be completed with anticipated funding over the next ten years. The Board will evaluate the projects and approve a ten-year plan which will be incorporated into the County's Capital Investment Plan. As part of the Capital Investment Plan annual review, progress will be evaluated annually and adjustments made according to needs agreed upon by the School Boards and Board of County Commissioners.
- Economic Development - 50% of the funding will be allocated to Economic Development initiatives generally as shown on the attached chart and the Board of Commissioners will approve a ten-year Economic Development Plan as part of the County's Capital Investment Plan.
The resolution covering the division of funds is for the next ten-years.
The Orange County Finance Department estimates, based on current sales tax figures, that the one-fourth of a penny sales and use tax would generate approximately $2,500,000 annually.
One penny in Orange County property tax raises around $1,600,000.
One-fourth of a penny in Sales Tax is projected to raise around $2,500,000.
There are a multitude of items that are exempt from the sales tax including prescription medication, gasoline, certain agricultural supplies and motor vehicles. For a full listing, see North Carolina General Statute 105-164.13.
Food (groceries) are also exempt per General Statute 105-164.13B.
Yes, since the legislature granted counties authority to seek voter approval, many counties have placed the referendum on a local ballot.
The current sales tax rate for Orange County is 6.75% or six and three quarters of a cent for a $1.00 purchase. The North Carolina Department of Revenue has a tax rate list of all North Carolina counties.
The sales tax lessens the pressure on property tax but it will be up to the Board of Commissioners to determine the property tax rate during their annual budget discussions. Currently property tax is the primary source of funding for Orange County Government services.
The Sales and Use tax will be one penny for every four dollar purchase.
Property taxes are assessed based on how much property you own. Not all residents own property. Businesses pay property taxes. Keeping property taxes low can help encourage economic development. Sales taxes are generated from monetary transactions. Tourists and visitors to Orange County would also help support county services through a sales tax. According to the Chapel Hill/Orange County Visitors Bureau approximately 2.5 million people visited Orange County in 2009.
Details on the voting process can be found on the Board of Elections website.
No, all voters must mark either “For” or “Against” if they want their vote to count on the Sales and Use Tax.
There is no sunset on the implementation of the tax. It could be repealed in future years by a majority vote of the Board of Commissioners.