ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, May 22, 1996 TAG: 9605220054
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DAN CASEY STAFF WRITER
NOTE: Below
IT SOUNDED GOOD, lowering the Business Professional and Occupational License levy, but does government ever let go of a tax?
Lots of business people who thought the General Assembly lowered their gross receipts taxes this year may actually wind up paying more. And some of them are hopping mad.
The hoopla is over the much-hated Business Professional and Occupational License tax - or BPOL - and General Assembly efforts this year to give small businesses a tax break.
The way the new law is being applied in some localities - such as Roanoke and Roanoke County - thousands of businesses, including the smallest home-based enterprises, will end up paying more thanks to a new BPOL fee.
The Roanoke Regional Chamber of Commerce is calling the change a "tax increase" and lobbying strongly against it.
"Our businesses do not distinguish between a fee and a tax," chamber President John Stroud told Roanoke City Council on Monday night.
"We feel the way to increase revenues to the city is through business growth, not increases in taxes and fees," he added.
But some officials shrug off the increase as minor - as little as $1 to $50 a year. The smallest businesses, which now pay a $30 minimum BPOL tax, will see a $20 annual increase - 67 percent.
For them, "We're talking about a $20 impact once a year," Roanoke Councilwoman Linda Wyatt said Monday before council enacted the change 5-0. The increase will barely cover the city's cost of issuing business licenses, Vice Mayor William White noted.
South Roanoke resident Cathy Caddy was the only business owner to show up and object Monday night at council's hearing on the BPOL change.
The self-employed auditor of telephone and utility bills and leases said the worst part of the change is that it penalizes the smallest businesses for being small. The city will collect about $36,400 in extra revenue from 1,820 tiny businesses that now pay a $30 minimum tax but will pay the $50 fee instead.
"I have a minuscule business," Caddy said. "It's really tiny, and I am affected by this. I would hope our city would help us grow, not penalize us for being small."
Here's what's happening:
With certain limits, the state legislature this year passed a law that exempts businesses grossing $100,000 or less from paying the BPOL tax. But it also allowed localities for the first time to charge a fee of up to $100 for issuing a business license.
Roanoke and Roanoke County anticipate losing hundreds of thousands of dollars of revenue each as a result of the BPOL exemption, so they're rushing to cover those losses by charging the $50 license fee.
Roanoke City Council did it Monday night; a similar proposal will be before the Roanoke County Board of Supervisors next month.
But the fee is $20 higher than the $30 minimum tax the smallest businesses now pay. And the $50 fee will be added to the full BPOL bill for businesses already grossing more than $100,000 a year, which get no BPOL break.
The bottom line is that in Roanoke, 4,749 businesses - about 74 percent of the total in the city - will pay $1 to $50 more per year.
Meanwhile, the other 26 percent - those businesses that gross between $35,714 and $100,000 - will pay $1 to $530 less in BPOL taxes next year.
Overall, City Finance Director Jim Grisso estimates the city stands to gain slightly more than $8,000 in additional income from the proposal, a drop in the bucket compared with the $9.1million in BPOL revenues the city is expecting in fiscal 1997.
In the county, 2,751 businesses would pay 25 cents to $50 more annually, and 2,732 would pay less under a $50 license fee proposal the Board of Supervisors will consider at a public hearing June25.
But in the county, the fee income won't cover the losses caused by the state-mandated $100,000 BPOL exemption. So the county is also considering increasing BPOL rates in two of four categories.
The rate for financial, real estate and professional services would increase from 50 cents per $100 of gross receipts to 58 cents. The rate for repair, personal and business services would increase from 34 cents per $100 of gross receipts to 36 cents. This should generate about $145,000 and make up most of the remaining losses.
"The General Assembly decided this, I didn't," Board of Supervisors Chairman Bob Johnson said.
"I don't like BPOL - I don't like taxes, period - but I understand the need to pay for county services," he added.
The state law does not apply to localities with fewer than 25,000 residents, such as Salem, where no changes are in store. It also doesn't apply in jurisdictions that have chosen not to levy a BPOL, such as Montgomery, Bedford and Franklin counties.
In Blacksburg, which has a population of about 35,000, Town Council will consider the impact of the law and possible license fees, but no date has been set.
Staff writers Christina Nuckols, S.D. Harrington and Elissa Milenky contributed to this story.
LENGTH: Medium: 94 linesby CNB