Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, January 28, 1995                   TAG: 9501300028
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE:                                 LENGTH: Medium

WHO NEEDS TAX CUTS?

Despite Gov. George Allen's claims to the contrary, Virginia's taxes don't hurt the business climate and don't need to be cut, the Roanoke Valley Business Council said Friday.

With funds tight for higher education and new prisons to be built, ``prudent business judgment is not being used when cuts in taxes are proposed,'' the group said.

The council, which held its quarterly meeting Friday, is made up of chief executives of the valley's 50 largest employers. It hopes to throw its weight in favor of the status quo by mailing state lawmakers a five-paragraph statement questioning Allen's plan.

The office of one leading Democrat was pleased for the support of another ally against the Republican governor's tax-cut proposal.

``This is great news and it helps a lot,'' said Jim Echols, spokesman for House Majority Leader Richard Cranwell of Roanoke County. Cranwell is chairman of the House Finance Committee, where two tax-reduction measures will be voted on.

But state Trade and Commerce Secretary Robert Skunda downplayed the business group's statement, citing reasons to support the tax-reduction plan.

The plan would free up $26.8 million over five years in the Roanoke area for economic expansion by businesses and consumer purchases, he said.

The Roanoke-area business executives said they generally favor tax cuts, but said now is a bad time to pass one.

Allen has won support from some business advocates for his plan, which calls for a $2.1 billion tax cut over five years to be achieved through lower state income taxes and elimination of the tax levied by localities on businesses' gross receipts.

Business representatives have argued that by taxing gross receipts without regard to a company's profitability, the business, professional and occupational license tax is unfair and should be phased out, as Allen proposed.

Still, while stopping short of saying it backs the license tax, the Roanoke Valley Business Council said concerns about the business climate do not justify the proposed tax cut.

``The tax situation does not seem to be hurting the business community at this point,'' said James Arend, senior vice president of Atlantic Mutual Companies in Roanoke and council president.

The two sides give conflicting views of how high taxes are.

The trade secretary said Virginians are under ``the 13th highest state-level individual income tax burden,'' citing data from the Tax Foundation in Washington, D.C.

But other reports have shown that Virginia has the nation's second-lowest overall tax burden, said Tom Robertson, president and chief executive of Carilion Health System.