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New tax law to increase cost of meal plans - Technician: News

New tax law to increase cost of meal plans

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Posted: Wednesday, September 25, 2013 1:08 am

Students who have a meal plan will soon be paying more for food, as a new state tax law will raise the cost of dining on campus.

The new law, which will take effect Jan. 1, forces N.C. State, as well as all other universities in North Carolina, to charge sales taxes on all food—even for students who have meal plans. 

Campus Enterprises, the umbrella group that includes University Dining, NC State Bookstores and Trademark Licensing, had not anticipated the change in tax structure.

“Well, it was definitely a surprise because, in the 30 years that University Dining has been in existence, we don’t have any record of ever having to charge tax,” said Jennifer Gilmore, director of marketing and communication for Campus Enterprises.

The Commuter Plan will be the most affected by the law change. In this plan, students pay $750 to obtain dining dollars, which are used to buy untaxed food on campus. 

Next semester the advantage of this plan will be diminished substantially. 

“When we created the Commuter Meal Plan this past year, one of the attractive pieces to that was the tax-free feature,” Gilmore said. “So of course we were disappointed when the legislature chose to take that incentive away.”

In addition to the commuter plan, the new tax law will also raise the final price of food for students with any other meal plan. 

According to Gilmore, any new student who chooses to live on campus in his or her first year is required to have a meal plan. She estimated that there are currently about 9,100 students with meal plans at N.C. State, and about 3,500 of those are required.

Gov. Pat McCrory signed the bill into law in July with the intent of simplifying the tax structure and lowering both individual and business taxes. The bill will introduce a flat individual income tax of 5.8 percent in 2014, and be lowered to 5.75 percent in 2015. 

Corporate income taxes will also be reduced during the next two years, first from 6.9 percent to 6 percent in 2014, and then to 5 percent in 2015. Eventually, if revenue goals are met, the corporate tax could go as low as 3 percent.

CNNMoney.com said that the hope is that sales taxes collected from the growing economy will compensate for the $2.4 billion in lost revenues from the new reforms over the next five years. 

These sales taxes will be partially paid by the N.C. State students that were previously exempt.

Arda Cole, a sophomore in engineering, is currently living on campus and has a meal plan. He said that he does not intend to purchase another meal plan once he moves off-campus—with or without the taxes.

“It’s kind of pricey,” Cole said.

Cole said he did the math and feels that the prices for a meal plan were not worth the money, and that the new taxes made it even worse. He said he intends to shop at a grocery store and cook from his apartment to save money.

Gilmore said that the University does everything it can to keep prices low and competitive, but there are a lot of expenses that must be covered. Additionally, she said that N.C. State is still more competitive than other schools in the area.

 “I think we’re lucky that we’re going into this with attractively priced meal plans,” Gilmore said.

Gilmore said that it’s a university mandate for all of the Campus Enterprise programs on campus to support themselves and then help supply financial backing to the University.

“At the end of the year, we do pull our resources to make a collective donation back to scholarships,” Gilmore said.

Last November, Campus Enterprises donated $1,187,367 toward student scholarships, according to its website.

Gilmore said that even before the donations, University Dining puts money toward facilities and improvements, which requires students to continue to spend on campus.

 “We are always looking at what area of our dining program that we can make better for our students,” Gilmore said.

Gilmore said that administrators from Campus Enterprises are still looking into what they are going to do about the Commuter Meal Plan. She said that the main incentive now is the ability to purchase the dining dollars directly from the cashier’s office, or have it covered through financial aid.