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Groups Rally for Smaller, Cheaper Government

BY Wade Rawlins
by Wade Rawlins on 6/6/01.

Under a white tent behind the Legislative Building on Tuesday, about 250 tax protesters cheered speeches against tax increases and against a state lottery, chanting "We Want Less."

Meanwhile, watching the anti-tax rally from just beyond the tent's shadow, state Rep. Paul Luebke, co-chairman of the state House Finance Committee, ticked off a series of possible tax increases his committee may consider to provide more money for the state budget.

The rally and discussion of potential tax increases foreshadow the clash of ideas - to cut taxes or increase spending - that will play out in the weeks ahead as the state House takes up the $ 14.7 billion budget plan passed last week by the state Senate.

Speaking at the rally, House Minority Leader Leo Daughtry blamed Democratic leaders including former Gov. Jim Hunt and Gov. Mike Easley for the state's financial problems. He called the budget passed by the Senate last week "a joke."

The Senate's budget plan includes proposals to raise $ 190 million in revenue by raising taxes and closing so-called tax loopholes. As of the second year, the tax changes would produce $ 230 million more in revenue for the state.

Closures of tax loopholes are nothing but thinly disguised tax increases, said Daughtry, a Republican from Smithfield. "I am committed to not raising taxes."

Daughtry said House Republicans would offer their suggestions for the House budget but haven't done so thus far.

The midday rally, sponsored by the anti-tax group Citizens for a Sound Economy, was aimed at blunting the calls for higher taxes and fewer budget cuts that legislators have heard as state workers; advocates for the poor, disabled and mentally ill; and educators and students held their own rallies in recent weeks.

Daughtry and U.S. Rep. Walter Jones, a Republican from Farmville, also spoke against a proposed state lottery.

"I hope the state of North Carolina and the people of the state don't turn to gambling to educate children," Jones said.

So far, no action has occurred on any of the lottery bills pending before the General Assembly as lottery supporters continue to try to get enough support to win a vote.

Easley told reporters Tuesday that the lottery issue is still alive in the legislature, even if discussions have not begun in earnest. And the governor said any discussion of tax increases is premature before lawmakers give the lottery some consideration.

Lori Apple, a part-time physical therapist and homemaker from Winston-Salem, attended the rally to oppose a state lottery. She said more fiscal responsibility could have prevented the state's budget problems.

"Government should trim the budget down just like a family often has to do without luxuries or privileges," Apple said. "Government should behave no differently."

The tax debate could begin today as the House Finance Committee is scheduled to start examining the Senate's proposed package of corporate loopholes and other provisions such as repealing the cap on taxes on luxury cars and boats.

Even if the House committee decides to back tax increases, it remains unclear whether the full House - where Democrats hold only a four-seat margin over Republicans - would go along.

"We're interested in seeing loopholes closed," said Luebke, a Durham Democrat and one of four co-chairs of the committee. "Loopholes are people who are currently avoiding the taxes most of us are paying."

Luebke said he planned to have the committee examine other possible tax increases, including raising the tax on alcoholic beverages at another meeting next Tuesday. Senate Democrats also have talked about increasing the state's taxes on the sale of alcoholic beverages.

Luebke said one possibility would be levying a 6 percent state sales tax on liquor sales at state ABC stores. Based on liquor sales of $ 315 million in 1999, the 6 percent tax would generate at estimated $ 18 million in revenue, according to the legislative research staff.

State excise tax is charged on liquor, wine and beer. In addition, sales tax is charged on wine and beer sold at grocery stores and on mixed drinks at restaurants. But no sales tax is charged on sales at ABC stores.

Luebke said they also may consider various increases in individual and corporate income taxes.

Luebke said the committee had little interest in raising taxes on long-distance telephone calls or satellite or cable TV service, as called for in the Senate budget plan.

"It's fair to say the committee is least interested in taxes that fall heavily on consumers," Luebke said.