Last year, Republicans in the General Assembly continued their altruistic spay and neuter program targeting local governments. Instead of addressing spending and taxation in the Commonwealth, Republicans in Richmond look to save taxpayers money by disabling counties from generating revenue.
Your counties pay your police, your firemen, your teachers, your schools, and invest in infrastructure aimed at creating higher paying jobs. The Commonwealth, however, seems to have decided that these services aren’t important to most Virginians, who would rather see schools and police stations in shambles than see any revenue interruptions in Richmond.
State Senator Amanda Chase, whom I very much appreciate, has – on behalf of local businesses – proposed SB 836.
A bill to reduce local revenue collections is among a growing list of pre-filed legislation to be considered in the upcoming General Assembly session. SB 836 (Chase) requires that a locality tax businesses based on “Virginia taxable income” rather than “gross receipts,” which is the current practice. Such a mandate would have a significant fiscal impact on the 48 counties that employ the Business Professional Operating License (BPOL) tax. VACO
Now, it’s one thing to cut taxes at the State level.
I, and millions of other Virginians in the Commonwealth, would greatly appreciate lower State income taxes. However, as a devout attendee of my local Board of Supervisors and a citizen-supervisor of county income and expenditures, I can tell you how hard our Caroline County Supervisors, staff, and county employees work to ensure low taxes and quality services. County departments frequently come in under budget in order to save money for local taxpayers, investing that money in cash for infrastructure investments.
This legislation, however, will make it harder for Caroline County to raise revenue.
A technical report by Virginia’s Join Legislative Audit Review Commission (JLARC) in 2013 found that changing the basis of the BPOL tax from gross receipts to income (when compared to actual 2012 collections) would reduce local revenue from the tax by approximately 95 percent. The report also concluded that such a change “… would make the tax more difficult for businesses to understand and comply with, and would require more resources for local governments to administer.”
There is nothing admirable about cutting the taxes of other governments, especially when those governments are responsible for providing most of the real services citizens of the Commonwealth enjoy on a daily basis. This legislation is akin to the Federal Government passing legislation banning sales taxes in the 50 States.
I am not personally a fan of BPOL taxes. I believe they unfairly target small business operators. However, in rural counties, the vast majority of businesses are, in fact, small business operators. These decisions should be left up to county citizens, not imposed upon them by Richmond.
What’s really going on here? Republicans in Richmond want to campaign on cutting taxes, only, they don’t want to cut their own taxes. Businesses looking to avoid (often unfair) BPOL taxes, who aren’t having luck repealing those taxes at the local level, go to representatives in Richmond and ask them to strong-arm localities. That’s exactly what this legislation does.
Think this is a tax cut that will help small businesses? Think again. Counties will have to raise revenue some other way and Richmond continues to decrease local options. So, if SB 836 passes, get ready for increases in property, sales, and (if you live in towns or cities) excise taxes. When the Commonwealth attacks a locality’s ability to raise revenue in one area, the county is forced to increase taxes in another area or to reduce services overall.
I understand exactly why Senator Chase has introduced this legislation. It’s a crappy tax. However, it is not Richmond’s job (Yes, I get we’re a Dillon Rule State) to make this decision. This decision should be up to the local electorates and their duly elected representatives. I trust my Caroline County Board of Supervisors to make the right decisions. Now, if you don’t trust your local county Board of Supervisors, then my suggestion is that you replace them. Don’t go crying to your Delegate or State Senator asking them to do the job your Supervisors seem disinclined to do.
SB 836 is a tax on property owners. Plain and simple. This legislation has been referred to the Committee on Finance.
In particular, I would like to see a Nay vote from Senator Jill Vogel, Senator Ryan McDougle, Senator Siobhan Dunnavant, Senator Frank Wagner, and Senator Mark Obenshain.
I can’t disagree more with Mr. Tucker. Here in Fairfax we killed a meals tax in 2016. Had the G.A. left it solely up to the board of supervisors (instead of a referendum), a meals tax would have been enacted. If BPOL had a similar referendum requirement, it instead might be killed as well.
The arguments you make about cutting core services and raising RE taxes are the EXACT SAME the pro-meals tax people made here in Fairfax.
We will have to cut funding to core services, schools, public safety, roads, parks…
We must diversify revenue sources.
We must have more money and if you eliminate one income stream we will have to raise RE taxes.
Look, BPOL taxes are currently being collected and if the GA is going to axe them, they need to figure out how to wean counties off of BPOL taxes and not simply nuke them. The weaning must be set up in a permanent fashion (unlike the car tax scheme which I could write a book about). The concept of killing BPOL is worth supporting.
All of this is moot. I predict the bill will die a quiet death on an unrecorded vote to table in a Senate Committee or Subcommittee. Transparency in action.
Good article. This kind of legislation goes hand in hand with the unfunded mandates the GA continues to push onto our local governments. As tax revenues would need to be made up somewhere if this passes, I would love to know which taxpayer the GA suggests the pain gets passed onto?
contrary to what was claimed in this article, locals boards and councils do a horrible job at keeping taxes and budgets low. they routinely raise taxes and fees. there is almost never, yes never, a lowering of a budget. those budgets are filed with spending on items that have no place what so ever being connected to tax revenue.
Even the better counties in the state do a poor job at staying out of things government has no business in.
You admit it’s a horribly-based tax (and it is). You also note that no county has taken it upon themselves to fix this horribly-based tax.
Sorry, Brodie. That’s what the General Assembly is there for. I’ll support this 100%.
As someone who lives in the People’s Republic of Arlingron, I am very grateful for everything the General Assembly does to keep our own county board from hurting us any more than they already do. Also, BPOL as a concept needs to go away and never return.
[…] So it comes as a tiny bit of a surprise to read The Bull Elephant’s Steven Brodie Tucker rush to BPOL’s defense: […]
I am happy you trust your Caroline County’s BoS to do the right thing. You are fortunate and must be thrilled. But for those of us poor saps who live in liberal-ruled, oppressive local regimes, as I do in all-Democrat BoS run Albemarle County, I really do appreciate the G.A. helping to put at least some brakes on our ever-skyrocketing local taxes.
Just another perspective. The G.A. is some of us’ heros.
What an unbelievable lack of respect for the Republican Supervisors in every county who do not only a good job with governance BUT who are called on to help these people in the GA get elected every two and four years. If you are a conservative supervisor who is working hard to balance these things and provide all the things that affect the lives of citizens in the way of services, remember this when it comes endorsement time. Better still take note of exactly who these things come from even if they are killed in committee.
Senator Reeves and Vogel better vote against this, or it’ll be an uphill battle come primary time.
I can’t really speak to the implications, but I like the article. Where else do you find real discussion on the nitty-gritty items of governance? (answer: nowhere)
That’s why we’re here.
There are a lot of downsides to taxing gross receipts. It’s very unfair to people like truck drivers who have receipts that include the cost of their diesel fuel, etc.
BPOL Taxes Suck, still….
Okay, I have not studied that tax. It is not something that exists in Maine. So, just a couple of things. One is that all business must compute their Virginia taxable income. So if the change is going to be to apply some tax rate to that number it really is not a big administrative burden.
Now, educate me, please. Because common sense tells me that any tax that is imposed on business owners (as opposed to, say, a sales tax that is paid purely by consumers) and that is based on gross receipts has to be unfair. If I build houses for a living, I might have to do $5 million in gross receipts to net $100k. If I am a CPA with a small practice, I can net $100k if I do $500k in sales. Assuming the tax is not going away, I think the argument that it should be applied to taxable income and not to gross receipts makes complete sense. All that needs to be done to preserve the revenue stream is to change the rate……….like when real estate is revalued in a county.