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BPOL bill scary for localities

The Virginia Municipal League (VML) has issued a call for heads of state municipalities to urge legislators to oppose a bill that would eliminate the Business, Professional and Occupational License (BPOL) Tax.
If the bill is successful, local officials say it could be devastating to their budgets.
Pulaski Town Manager John Hawley said it would take a 13-cents-per-hundred increase in the town’s real estate taxes to equal the amount of revenue the town collected from BPOL during the 2007-08 fiscal year. Pulaski collected $416,628 that year and has budgeted for $370,000 in BPOL revenues for 2008-2009.
In the Town of Dublin, Treasurer Rebecca Lineberry said the town collected $60,979 in BPOL taxes during the 2007-08 fiscal year.
The bill (HB 2205) would eliminate local authority to impose a BPOL tax effective July 1, according to an
“Action Call” issued by the VML late Tuesday morning. The bill is being sponsored by Northern Virginia Del. Jeffrey M. Frederick (R-Woodbridge) of the 52nd District. On his website, Frederick says the proposed bill would repeal “the tax established to pay for Virginia’s efforts in the War of 1812.”
He goes on to say that the tax “is an unfair tax that requires even unprofitable businesses to pay.”
BPOL taxes are charged against gross receipts, meaning businesses pay a tax on their total sales for the year, without credit for expenses or whether they turned a profit.
In addition to the towns of Dublin and Pulaski, Pulaski County also collects a BPOL tax. However, County Administrator Peter Huber said the BPOL has less effects on counties because many do not collect the tax.
The county switched from a Merchant’s Capital tax to the BPOL tax in 2007. During it’s 2008-09 fiscal year it collected $566,508 in revenue from the BPOL, according to Commissioner of the Revenue Trina Rupe.
Rupe also noted that it helped to collect $12,000 to $13,000 in delinquent Merchant’s taxes that had to be paid before a BPOL license could be issued.
If the bill becomes law, Huber said “It would be a major impact on Pulaski County. We’re already trying to reduce our dependence on Real Estate taxes as much as possible. The BPOL gave us a way of kind of spreading things out broader.”
Doing away with the BPOL “would likely increase the real estate tax,” he added. He said the only other options would be increases in Personal Property or Machinery and Tools taxes – neither of which are “very strong” revenue tools.
Based on the new property assessments, Huber said a loss of the BPOL revenue would be the equivalent of a two-cent increase in real estate taxes.
Huber recommended the change to a BPOL tax, saying the Merchant’s tax, which is levied on a company’s inventory, “has no more growth potential.” He estimated the county would double its revenue by making the switch.
At that time, Huber also pointed out that a BPOL tax is easier on businesses within the incorporated towns and might encourage business development within the towns. Under the Merchant’s Capital tax, town businesses had to pay a BPOL tax to the town and Merchant’s Capital to the county. The county cannot impose a BPOL tax within the towns.
Rupe said the state’s Commissioner’s Association and Virginia Association of Counties (VACo) also are urging county officials and commissioners to speak out against the proposed legislation.
In it’s Action Call, VML points out that cities, towns and counties in the Commonwealth collected $651.9 million in BPOL taxes during the 2007 fiscal year.
“Please call or e-mail your delegate to urge opposition to HB 2205, and copy the members of (the) House Finance (Committee),” the VML notice states. “Include information on the amount of BPOL collected in your locality, and what this amount translates to in terms of pennies on the real estate tax.”
VML contends eliminating the BPOL would shift the burden for local services on real estate taxpayers.

BPOL bill scary for localities

The Virginia Municipal League (VML) has issued a call for heads of state municipalities to urge legislators to oppose a bill that would eliminate the Business, Professional and Occupational License (BPOL) Tax.
If the bill is successful, local officials say it could be devastating to their budgets.
Pulaski Town Manager John Hawley said it would take a 13-cents-per-hundred increase in the town’s real estate taxes to equal the amount of revenue the town collected from BPOL during the 2007-08 fiscal year. Pulaski collected $416,628 that year and has budgeted for $370,000 in BPOL revenues for 2008-2009.
In the Town of Dublin, Treasurer Rebecca Lineberry said the town collected $60,979 in BPOL taxes during the 2007-08 fiscal year.
The bill (HB 2205) would eliminate local authority to impose a BPOL tax effective July 1, according to an
“Action Call” issued by the VML late Tuesday morning. The bill is being sponsored by Northern Virginia Del. Jeffrey M. Frederick (R-Woodbridge) of the 52nd District. On his website, Frederick says the proposed bill would repeal “the tax established to pay for Virginia’s efforts in the War of 1812.”
He goes on to say that the tax “is an unfair tax that requires even unprofitable businesses to pay.”
BPOL taxes are charged against gross receipts, meaning businesses pay a tax on their total sales for the year, without credit for expenses or whether they turned a profit.
In addition to the towns of Dublin and Pulaski, Pulaski County also collects a BPOL tax. However, County Administrator Peter Huber said the BPOL has less effects on counties because many do not collect the tax.
The county switched from a Merchant’s Capital tax to the BPOL tax in 2007. During it’s 2008-09 fiscal year it collected $566,508 in revenue from the BPOL, according to Commissioner of the Revenue Trina Rupe.
Rupe also noted that it helped to collect $12,000 to $13,000 in delinquent Merchant’s taxes that had to be paid before a BPOL license could be issued.
If the bill becomes law, Huber said “It would be a major impact on Pulaski County. We’re already trying to reduce our dependence on Real Estate taxes as much as possible. The BPOL gave us a way of kind of spreading things out broader.”
Doing away with the BPOL “would likely increase the real estate tax,” he added. He said the only other options would be increases in Personal Property or Machinery and Tools taxes – neither of which are “very strong” revenue tools.
Based on the new property assessments, Huber said a loss of the BPOL revenue would be the equivalent of a two-cent increase in real estate taxes.
Huber recommended the change to a BPOL tax, saying the Merchant’s tax, which is levied on a company’s inventory, “has no more growth potential.” He estimated the county would double its revenue by making the switch.
At that time, Huber also pointed out that a BPOL tax is easier on businesses within the incorporated towns and might encourage business development within the towns. Under the Merchant’s Capital tax, town businesses had to pay a BPOL tax to the town and Merchant’s Capital to the county. The county cannot impose a BPOL tax within the towns.
Rupe said the state’s Commissioner’s Association and Virginia Association of Counties (VACo) also are urging county officials and commissioners to speak out against the proposed legislation.
In it’s Action Call, VML points out that cities, towns and counties in the Commonwealth collected $651.9 million in BPOL taxes during the 2007 fiscal year.
“Please call or e-mail your delegate to urge opposition to HB 2205, and copy the members of (the) House Finance (Committee),” the VML notice states. “Include information on the amount of BPOL collected in your locality, and what this amount translates to in terms of pennies on the real estate tax.”
VML contends eliminating the BPOL would shift the burden for local services on real estate taxpayers.