Tuesday, January 21, 2014
BPOL battle begins Wednesday
ACTION
VACo members, please contact your delegates to oppose HB 371 (Head), which mandates that the BPOL tax rate be applied against the Virginia taxable income of corporations and the net income of sole proprietorships and pass-through entities.
HB 371 is in a House Finance Subcommittee and will be considered Wednesday afternoon.
THE ISSUE
Under current law, local governments have the option to impose BPOL on either gross receipts or net income. Removing the option will have an enormous fiscal impact on localities.
A report by the legislature’s investigative arm – the Joint Legislative Audit and Review Commission – concluded last year that such a change would reduce local BPOL revenue by up to a staggering 95 percent. This would require an average BPOL tax rate increase of 40 percent on “profitable” businesses to maintain the same level of local revenue. However, because BPOL tax rates are capped by state statute, it would be impossible to make up the lost revenue.
JLARC also reported that a change of this magnitude would be far more difficult for businesses to understand and for local governments to administer. In FY 2012, local governments collected more than $683 million from BPOL.
TALKING POINTS
• The bill would reduce local revenue with no replacement revenue.
• Localities cannot carry out state mandates in education, social services and public safety without adequate resources.
• In FY 2012, local governments collected more than $683 million from BPOL.
KEY CONTACTS
House Finance Subcommittee 2: Hugo (Chairman), Byron, Bell, Richard P., Farrell, Fariss, DeSteph, Watts, Lewis, Keam, James
VACo Contact: Dean Lynch, CAE