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December 28, 2006

Dividing responsibilities

All states have a central or state government as well as local governments like counties and cities, but they don’t divide the responsibilities between the two levels in the same way. And N.C. State University's Mike Walden says this can affect tax rates.

"Transportation or roads … is a really good example of this. North Carolina has been criticized for having a high gas tax compared to other states. And we do," Dr. Walden says. "But one reason is because we do most of our road spending in North Carolina from the state level, so we use the state gas tax to fund that.

"For example, 80 percent of all road spending in North Carolina is done from the state. Only 20 percent from local governments. In many other states the split is more 50-50," he says. "So you have local governments doing more of the road construction and maintenance. Now, they don’t have generally access to a gas tax, so they have to use money from the property tax.

"So what this means is when you are drawing a conclusion about who has a higher tax and who doesn’t, you first have to ask who is actually bearing the cost -– the state level or the local level," he concludes.

Posted by deeshore at December 28, 2006 09:47 AM

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