Transfer tax revisited

You may recall that back in August, the General Assembly gave counties in North Carolina a bit of discretion in enacting new sources of revenue. Counties could add a quarter of a cent to the sales tax, or increase the tax on property transfers by .4 percent. In Durham the transfer fee is currently .2 percent, so that would have increased the tax to .6 percent (60 cents per hundred dollars, or $600 on a one hundred thousand dollar sale)

The catch was that voters in the county would have to approve the increase. Sixteen counties around the state put the transfer tax increase on the ballot, and it was defeated in every case. Chatham County was the nearest to Durham to ask voters to weigh in on this.

The conventional wisdom is that the real estate and development lobbies successfully argued to voters that taxing home sales unfairly put the burden of financing new schools and other infrastructure on current residents who are selling their homes, and not on newcomers. In one stunning moment, i heard the president of the Durham Association of Realtors actually speak in favor of impact fees, which would be assessed on new development, even the Realtors at the state and local levels have lobbied against these in the past. We'll see if that marked a change in actual policy or merely a convenient rhetorical device.

Regardless, most county commissioners in the state are now convinced that the transfer tax is dead in the water.

A recent poll done by Public Policy Polling for Wake County yields some interesting results.

The most important message to convey to the voters is that there are costs associated with growth and that they will have to be paid through some form of taxation. Foes of transfer tax measures this fall created the impression that not paying was an option. It isn’t, and the counties with referendums this fall failed to get that message across to their citizens.

In order to leap that hurdle we prefaced our poll with the statement that ‘Wake County is growing rapidly and must increase its revenue to pay for new schools, parks, roads, water and sewer.’ Given that background and before being asked about alternative ways of paying for growth, poll respondents supported a transfer tax by a margin of 49-40%.

Support for the transfer tax increased when folks were given the choice of a transfer tax or another form of taxation. For instance when pitted against the specter of property tax increases, a transfer tax was preferred by a spread of 59-20% among survey respondents. If counties effectively communicate that a transfer tax will help relieve the burden of property tax increases, their voters are much more likely to support a referendum.

Lots of folks out there want to live in the fantasy world that all the new people who move into the Triangle will increase municipal revenues enough to pay for all the new infrastructure to support them. Those folks no doubt are comfortable with their kids spending their entire scholastic careers in trailers.