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House candidates generally favor keeping BPOL tax
Sunday, November 3, 2013
By DEBBIE HALL - Bulletin Staff Writer
Candidates for two seats in the Virginia House of Delegates recently weighed in on the possible elimination of the Business Professional and Occupational License (BPOL) tax.
Incumbent 14th District Del. Danny Marshall, R-Danville, and opponents Gary Miller, a Danville Democrat, and Mary Martin, a Henry County businesswoman who is running as an independent, discussed the issue during a forum last week sponsored by the Martinsville-Henry County Chamber of Commerce.
Les Adams, the Republican running for the House in the 16th District, and his opponent, Democrat Elizabeth Jones, also weighed in on the issue.
Martinsville City Manager Leon Towarnicki, who attended the event, said all of the candidates seemed to recognize the importance of BPOL in generating revenue, and most generally were in favor of keeping it.
“I think it was encouraging to hear that they recognize how important it is to us, and particularly to this area of the state,” Towarnicki said. He added, however, he thought Adams was “a little vague” on the issue.
Adams, a Chatham lawyer, said during the forum and repeated Saturday that he would give “every consideration to every option to help create jobs ... ,” and that while “we need to pursue tax policies that are good for business,” he said the government also would need to realize the impact that losing that revenue would have on localities.
If the BPOL tax were eliminated, Adams said, he is committed to replacing the revenue stream to localities.
The Martinsville Bulletin on Saturday asked Adams to elaborate on his position as a result of Towarnicki’s comment. He essentially repeated what he said during the forum.
Martinsville and Henry County are among localities that oppose eliminating the BPOL tax — as well as the machinery and tools tax — due to the loss of revenue. Officials have estimated that combined losses could be more than $7 million in Henry County and nearly $2 million in Martinsville.
Towarnicki said interest in eliminating BPOL is mainly from some lawmakers in the eastern part of Virginia who maintain that the tax is unfair because it is based on gross receipts.
The Martinsville-Henry County Chamber of Commerce also opposes eliminating BPOL, which was the only tax discussed during Wednesday’s forum.
Jones said she supported the chamber’s position and “each and every business in Henry County.” Localities, she said, “have been having a lot of unfunded mandates ... . Localities are struggling to raise revenue.”
Miller and Martin both said they agree with the chamber’s position as well.
“We cannot put the burden of replacing this” on taxpayers, said Martin. “It’s one of those things that sounds good, but when you put it on a piece of paper,” it doesn’t look good.
Miller said although he is a cardiologist and many in the medical field support doing away with the BPOL tax, he disagrees because of the potential loss to localities. “We have to live with the current taxes,” he said.
There has been discussion about eliminating the tax for years, according to Marshall, who also serves on the Virginia Manufacturing Development Commission. That commission recently received an update from the Joint Legislative Audit and Review Commission, which studied the impact of restructuring BPOL so that taxes would be calculated on net income rather than the current gross receipts.
The study concluded that making that change would reduce local BPOL revenue by up to 95 percent and considerably decrease the tax liability of businesses that currently pay the tax, but to varying degrees. Retailers and wholesalers, unprofitable or low-profitability businesses and C-corporations could be among those paying lower taxes.
To maintain the same level of local revenue, an average BPOL tax increase of 40 percent on profitable businesses in the sectors of repair, personal and business service providers, high-profitability businesses and sole proprietorships would be required, according to the study.
The change also would be far more difficult for businesses to understand and local governments to administer, the study concluded.
Commission members are feeling that they would not move forward on a change unless “we can make localities whole,” Marshall said. “We have to figure out how to make this so localities are held harmless” and do not lose revenue.
Henry County Administrator Tim Hall, who also attended the forum, said he believes “there will continue to be discussions about” changes to BPOL, whether it is altered in the coming General Assembly session or not.
Hall said that while he heard the statements made by candidates, no one addressed a detailed plan to prevent a substantial negative impact on localities in the event of a change or elimination of BPOL.
“The devil is always in the details,” Hall said. “If it goes away and if we are made whole, what are the details of that process? That’s a rhetorical question because I don’t think anyone has the answers.”