Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 20, 1995 TAG: 9501200109
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
The regional chamber favors eliminating the tax as Allen has proposed, but only after the General Assembly identifies another source of revenue that local governments could use to replace it, said Bud Oakey, a chamber vice president and lobbyist. That position places the regional chamber at odds with the state chamber, which favors action in this year's legislature to begin a phase-out of the tax.
However, both the state and regional chambers, joined by the Virginia Municipal League and the Virginia Manufacturers Association, are backing proposals by a special General Assembly subcommittee that would immediately reform the license tax and create a joint legislative commission to look at the whole issue of local government funding, Oakey said.
The license tax reform proposal would eliminate the tax on gross receipts for businesses whose receipts are less than $100,000 annually and replace it with a flat fee of up to $50. Businesses with gross receipts under $4,000 would pay no fee. Businesses with receipts over $100,000 would still pay the full gross receipts tax.
The problem with the license tax, Oakey said, is it is neither fair nor equitable. Not all Virginia localities levy the tax. And where it is levied, businesses have to pay based on their gross receipts, even if they didn't make a profit during the year.
Allen has called for capping the tax at its current level in localties where it is levied and phasing it out over five years. Under the plan, the state would compensate the localities for the lost revenue during the phase-out period, at a cost of $750 million.
Local governments that depend on the tax have expressed concerns about Allen's plan. Increasing sales taxes or property taxes have been mentioned as possible ways of replacing the lost revenue.
Once the tax was phased out, Salem would lose $2.4 million a year, or 10 percent of its budget; Roanoke would lose $8.1 million; Christiansburg, $400,000; and Vinton, $235,000.
Although the regional chamber's ultimate goal is elimination of the tax after a substitute source of revenue is found, the proposed reform would, in the meantime, do away with a lot of bookkeeping for the state's smaller businesses, Oakey said.
The most exciting part of the subcommittee's proposals is the call for a legislative study of local-government funding, Oakey said.
The study commission would look into the proper roles of state and local governments; the proper package of taxes, fees and debt-financing that should be available to localities to fulfill their role; and the uniform and equitable administration of local taxes, he said.
Recommendations from the commission should be ready for consideration and action by the 1996 session of the General Assembly, according to the proposal, Oakey said.
Most of the state's business community would go along with the subcommittee proposals, with the exception of Northern Virginia businesses that want action to eliminate the license tax this year, Oakey said.
Oakey predicted that - except for Del. Richard Cranwell, D-Roanoke County, majority leader in the House of Delegates - the Roanoke region's representatives in the General Assembly will support the proposals for reform and for the study commission.
Oakey said Cranwell's aides and others have told him that Cranwell does not want to make any changes in the license tax this year.
Cranwell said he doesn't oppose the study commission, but he hasn't taken a position on the proposal.
Keywords:
GENERAL ASSEMBLY 1995
by CNB