Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 1, 1995 TAG: 9502010038
SECTION: EDITORIAL PAGE: A-8 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
But Allen was correct in singling out BPOL as a long-time irritant. Complaints about the levy, also known as the gross-receipts tax, have been raised and scuttled for many years. If lawmakers do nothing about BPOL except kill the governor's proposal, they will squander an opportunity to improve in Virginia's structure of local taxation.
The governor's ill-considered solution - phase out BPOL, and for five years provide extra state money to offset the lost revenue for those localities that had chosen to impose it - would be worse than the status quo.
By mandating abolition of a tax whose imposition currently is up to each local government, the plan would centralize rather than decentralize decision-making. The plan is backloaded, with the full bill not coming due until after Allen has left the governorship; the ultimate effect likely would be higher real-estate and personal-property taxes.
The subsidy feature is problematic for other reasons, too. Not only would it divert state revenues from urgent items, but it would also penalize those localities - mostly rural counties in Southside and Southwest Virginia - that have elected not to impose BPOL. Residents of, say, Patrick County would be subsidizing with their state taxes local government in wealthy Fairfax County - to offset Fairfax' loss of a local revenue source that, as it happens, the Northern Virginia county probably will repeal anyway.
The chief beef from business groups about BPOL is that it unfairly taxes businesses according to their size rather than profitability. As a result, BPOL critics say, the tax also inhibits job-creating growth of new and small enterprises.
Because BPOL is a local tax, helping pay for the kinds of nuts-and-bolts services that directly benefit business regardless of profitability, the fairness argument isn't as compelling as it might be if made against a similar tax on the state or federal level. And the competitiveness argument is less compelling than if BPOL were a mandate of the state rather than an option providing local governments with some leeway in tailoring their tax mix to their own particular circumstances.
But if BPOL isn't quite the ogre that Allen portrays it, neither is it a prince of a tax. Several proposals are afloat to modify BPOL in a revenue-neutral way: basing it on net rather than gross receipts, for example, or exempting businesses below a certain size. A farther-reaching idea is to abolish BPOL - and replace it not with state subsidies to those localities that happen to have BPOL now, but with a local-option add-on to the state income tax.
Examing such ideas with the consideration they deserve would require legislative Democrats to grant a Republican governor the point that BPOL has its problems. It would require legislative Republicans to grant Democrats the point that, on this gubernatorial proposal, Allen didn't think it through.
by CNB