DATE: Sunday, July 27, 1997                 TAG: 9707270118

SECTION: FRONT                   PAGE: A4   EDITION: FINAL 

                                            LENGTH:   70 lines

A LOOK AT THE TAX PLANS QUESTIONS AT THE HEART OF THE DEBATE

How great is the demand for tax relief?

``I haven't heard a great cry for either (tax plan),'' observed

Norfolk's Stanley Walker.

Slightly more than half of Virginians don't think the state is

spending enough on public education, and nearly half - 48 percent -

said taxes should be raised to improve schools and colleges,

according to a Virginia Tech survey released last month.

What are the tradeoffs?

Lawmakers worry about being forced to increase taxes or slash

services if today's robust economy sours, and about endangering

Virginia's coveted AAA bond rating that permits the state to borrow

money at relatively low interest rates.

Just how reliable are the numbers?

A powerful member of Beyer's own party calls his plan overpriced.

And the Gilmore plan assumes growth in the Virginia economy at a

rate some consider optimistic. The Virginia Municipal League also

says Gilmore's plan would cost hundreds of millions of dollars more

than he says.

Can it get through the Assembly?

Top Democratic lawmakers, who now control the House of Delegates

and the state Senate, say they would oppose the Gilmore plan in

next year's session.

Gilmore's plan would have a much greater chance of passage if

Republicans gained enough seats this fall to control the House and

if they won the lieutenant governor's race. The lieutenant governor

also serves as president of the Senate, which is split 20-20.

Key state lawmakers in his own party like Beyer's plan best

because it would be less costly over the long run, but they harbor

doubts about the prospect of any tax relief next year, given their

desire to shore up education, transportation and other programs.

GILMORE'S PLAN

Who would benefit? Owners of cars and trucks worth $20,000 or

less. More expensive vehicles would be taxed only on the value over

$20,000. Break would not apply to vehicles owned by businesses.

When? Gilmore's plan would be phased in over five years. The tax

break would increase every year until the fifth year, when it would

be completely phased in at the $20,000 level.

How? This tax is collected at the local level. Gilmore promises

that the state would reimburse localities ``dollar for dollar'' for

revenues they no longer would be collecting.

Costs: A total of $1 billion during the first four years and $620

million annually every year thereafter, according to the Gilmore

campaign. Local government groups estimate twice that amount.

BEYER'S PLAN

Who would benefit? Married couples with Virginia adjusted gross

income up to $75,000 and singles with income up to $40,000 would

qualify for a tax credit equal to the Personal Property Tax paid on

one or two vehicles up to $250 (if married) and on one vehicle up to

$150 (if single). Break wouldn't apply to vehicles owned by

businesses.

When? Virginians would get the credit for taxes paid in 1998.

How? Virginians would continue to pay the car tax to their local

governments and file for the credit with their May income-tax

filings.

Costs: A total of $202 million in one year, $808 million over

four. KEYWORDS: GUBERNATORIAL RACE VIRGINIA CANDIDATES

ISSUES TAXES

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