RALEIGH – The last few weeks of the 2004-05 fiscal year here in North Carolina promise to be frustrating ones for taxpayers.

In Raleigh, the North Carolina House is preparing its version of a budget plan for the budget biennium that begins on July 1 (though few expect it too be close enough to the Senate version to allow for the 2005-07 budget to be in place by then). While hope springs eternal, I wouldn’t bet on the House to reduce dramatically the tax bite that ravenous senators proposed.

Just as a reminder, the latter’s revenue mastication consisted of $778 million in higher taxes in FY 2005-06, most of that derived from re-imposing tax increases on retail sales ($413 million next year) and personal income ($20 million), along with a cigarette-tax hike of 40 cents a pack ($201 million), sales-tax expansions ($72 million), and estate-tax changes ($31 million).

Gov. Mike Easley’s budget has proposed a slightly smaller package of general tax increases, $741 million next year. But the Senate plan looks a whole lot worse if you treat the proposed government lottery as a taxing device, which it is. While estimates vary, a reasonable assumption would be that passage of the Senate budget would result in an annualized increase in the state tax burden of about $1.4 billion.

Whatever new fiscal burden gets plopped on the backs of taxpayers by lawmakers in Raleigh has to be considered in light of two other factors: local tax increases and the existing tax burden.

With regard to cities and counties, it looks to me like many if not most North Carolinians will see their property taxes rise. Counties such as Mecklenburg, Union, Rowan, Camden, Lenoir have passed or seem close to passing hikes. And while a few cities, notably Charlotte, appear to be backing away from initial plans to pile out their own tax increases, others seem poised to add some extra weight.

All of this adds up to no big deal, say many government officials and editorialists, because North Carolina’s tax burden is low.

Nope. Here are the facts on North Carolina’s current tax picture: 1) our total state & local tax burden, once low, is now at about the national average, and is at or near the top of the heap among Southeastern states (depending on your definition); 2) our top marginal tax rates on income are among the highest in the United States; 3) our combined sales tax rate, once low, is now just over 7 percent, placing us above most of our neighbors and higher than all but 13 other states in the union; 4) our total tax burden on business is among the worst in our region; 5) our gas tax is one of the highest in the country; and 6) our property taxes remain relatively low by national standards, but have grown significantly over time.

Is North Carolina a tax hell? Not by national standards, but regionally the appellation is pretty accurate. Will the actions of state and local officials this year make much difference? Yes – unfortunately not for the better.

Hood is president of the John Locke Foundation.