ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, April 10, 1997 TAG: 9704100036
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
DATELINE: RICHMOND
SOURCE: WARREN FISKE THE ROANOKE TIMES
One idea is to repeal the state sales tax on nonprescription drugs; the other is to eliminate corporate income taxes on small businesses.
Hoping to end speculation that he would raise taxes if elected governor, Lt. Gov. Don Beyer on Wednesday proposed freeing 95 percent of Virginia's businesses from paying state corporate taxes.
It was the second tax cut put forth this week by Beyer, the lone Democrat seeking nomination for governor. On Monday, he vowed to work for repeal of the 4.5 percent state sales tax on nonprescription drugs.
The two tax cuts would cost at least $50 million, he said. That expense is less than one-third of 1 percent of the state's total annual tax-generated revenue.
The proposals come amid mounting Republican charges that Beyer cannot accomplish his agenda without increasing levies. Beyer has proposed ambitious plans to raise teacher salaries to the national average and provide four-year college scholarships to high school students with B averages.
Beyer has spurned challenges to sign a pledge not to raise taxes, calling it "a cheap gimmick." Even so, he issued his strongest statement on the issue Monday night. "I do not intend to raise taxes, and I will not raise taxes," he said during an appearance on former Gov. Douglas Wilder's radio talk show in Richmond.
At news conferences Wednesday in Richmond and Roanoke, Beyer cited projections that economic expansion will cause state revenues to grow by $2billion over the next four years. He expressed confidence that the new revenues would pay for his programs and tax cuts.
Beyer proposed eliminating the corporate tax for all businesses that make less than $5million annually in gross sales and earn less than $50,000 in net profits. He said the plan would lift the tax burden for 95 percent of Virginia's 131,000 businesses.
"These are Virginia's home-grown businesses, dynamic entrepreneurs that are creating most of our jobs," he said. "We want to promote family businesses, mom-and-pop stores, fledgling technology companies and smaller companies that will grow as we continue to attract major corporations.
Beyer's proposal would save small businesses a maximum of $3,000 a year.
The plan would cost the state about $30million, Beyer said. He noted that the loss is just a fraction of the $410million the state reaps each year from the corporate tax. Almost all of the revenues come from large businesses that would be exempt from the cut.
Removing the sales tax on nonprescription drugs would cost the state at least $20 million a year, Beyer said. The General Assembly voted in 1990 to repeal that levy. But the enactment date has been pushed back repeatedly because of tight state budgets.
The tax is scheduled to be rescinded July 1, 1998, unless the General Assembly changes its mind again. Beyer said he would strongly urge lawmakers to go forward with the repeal.
Attorney General Jim Gilmore - the lone candidate seeking the Republican gubernatorial nomination - said Wednesday that Beyer is not credible on taxes. "Don Beyer promising tax relief is like Dr. Kevorkian selling life insurance," he quipped.
Gilmore referred to a Washington Post article last month that suggested Beyer might seek tax increases to pay for his programs. Beyer's campaign has said the story was inaccurate.
Gilmore, while also saying he would not raise taxes, has declined thus far to sign a no-tax pledge. He said he would address the matter and reveal his own fiscal agenda April 29, when he officially declares his candidacy.
For more information on this year's elections, go on line at www.roanoke.com and click under "political resources."
LENGTH: Medium: 74 lines ILLUSTRATION: PHOTO: (headshot) Beyer. color. KEYWORDS: POLITICS GOVERNORby CNB