Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 11, 1994 TAG: 9412120040
SECTION: VIRGINIA PAGE: B1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
Regardless of whether they think doing away with the tax will help their businesses, they all wonder - sometimes with concern - about where the localities will find the money to replace the revenue lost if the tax is phased out in five years, as Allen has proposed.
"That sounds good to me," Arthur Karides of Brambleton Avenue in Roanoke said of Allen's plan to eliminate the business-license tax. Karides is a self-employed motor-route vendor of cakes and pastries.
"People are having a difficult time," said Karides, who only recently began paying the tax to the city of Roanoke. The tax burden is enough to kill struggling businesses, he said.
Rob Logan of Logan Furniture in Salem said eliminating the license tax would help small businesses. But the tax, he said, is revenue that localities have budgeted and on which they depend, and it has to be replaced.
He would like to see an explanation of what the long-term effects of the tax cut would be on the localities, Logan said. If the tax is replaced by some other form of revenue, it's going to come out of his customers' pockets, he said.
The Roanoke Regional Chamber of Commerce supports Allen's proposed business-tax cut as "a strong step forward," said Bud Oakey, the chamber's vice president and lobbyist in Richmond. Eliminating the tax would help bring new business to the valley, he said.
The tax creates an uneven playing field for businesses because it is not imposed by all localities and because the amount levied can vary from locality to locality, Oakey said. The money taken from business stifles growth, and the chamber is interested in creating higher-paying jobs, he said.
The chamber recognizes that localities need time to wean themselves from the tax, Oakey said. If a source of revenue is found to replace the tax, it needs to be fair and consistent, he said.
Oakey said that Fairfax County, which takes in $55 million annually from its business-license tax, had agreed to endorse the governor's proposal and find a source of revenue to replace the tax or eat the loss.
Jack Roberts, owner of the Yellow Cab Co. in Roanoke, said he's never had a problem paying the license tax. "I think the city has been fair with us, and we've been fair with the city," he said.
Others also don't find the tax that objectionable. "I really and truly don't feel they have an unfair tax," said Sandra Wyatt, controller of Davidsons clothing stores, based in Roanoke.
Wyatt said Davidsons pays quite a bit each year in license tax and it would be nice to keep the money, but the company also asks for a lot of services each year from the localities in which it operates.
If the tax is eliminated, Wyatt and others said they're not sure what form of tax they would like to see replace it.
Allen has said on Dec. 19 he will unveil his plan for coping with the losses to the localities from phasing out what he called the "despised" business-license tax and from another proposal to cut state income taxes.
When he announced the tax plan Dec. 2, he said he would get started on paying for the tax cuts by cutting the state's 110,000-employee work force. He announced an immediate hiring freeze for state government and a severance package to encourage workers to quit.
Naomi Bolling, who owns the Bandroom, a small music store on Brambleton Avenue in Roanoke County, said she hasn't found the license tax burdensome and said she would just as soon that her business pay it rather than have to pay it personally through a higher property tax or sales tax.
Sen. Joseph Benedetti, R-Richmond, has suggested that giving the localities the right to raise the local sales tax might be a way for the General Assembly to compensate them for Allen's proposed tax cuts.
"If we end up raising sales taxes, you have to consider who's going to bear the brunt of it," said Alan Raflo, editor of Virginia Tech's Rural Economic Analysis Program's newsletter. Many view the sales tax as a regressive tax that has people with lower incomes paying a bigger share of the tax burden, he said.
But raising real-estate and personal-property taxes would be a difficult thing for local governments to do politically, Raflo said.
by CNB