Terry McAuliffe proposes plan to reduce local business taxes
Virginia gubernatorial candidate Terry McAuliffe today announced his plan to reform Virginia’s local tax systems and find revenue-neutral pathways to reducing or eliminating taxes that hinder business growth in the Commonwealth.
“The top priority for the next Governor should be to help strengthen and diversify Virginia’s economy in the face of a changing economic landscape. As we do that, we can’t afford to have a system of complicated, anti-growth taxes for small businesses,” said McAuliffe. “We need to update our local tax systems to make it easier for businesses to start and grow, and make sure that Virginia’s economy remains competitive.”
McAuliffe will work in a bipartisan way with the legislature and with stakeholders in both the business community and local government to find agreement on revenue-neutral solutions to give localities the option to reduce or eliminate the burdensome BPOL, Merchant’s Capital tax, and Machinery and Tool tax.
“I am committed to finding mainstream solutions to reducing inefficiencies in our local tax systems, because we need to do everything we can to encourage business growth across the Commonwealth,” said McAuliffe.
McAuliffe first presented the outline of this plan to the Portsmouth Chamber of Commerce on April 18, 2013.
McAuliffe’s Local Tax Reform Plan includes:
Reducing or eliminating the following anti-growth taxes:
- The Business Professional Occupation Licensing (BPOL) tax: The BPOL tax is particularly burdensome on small, new, and expanding businesses—the ones who create most of the new jobs in this country. Businesses are taxed on gross receipts, regardless of whether the business is profitable yet.
- The Machinery and Tool (M&T) tax: This anti-growth tax creates a negative incentive for equipment-heavy businesses like manufacturers to purchase new equipment because it specifically taxes the cost of machinery.
- The Merchants Capital (MC) tax: The Merchants Capital tax is counterproductive and easily avoidable. Since it taxes inventory that a business has on a set day, it creates an inefficient incentive for businesses to move inventory out of a locality on a specific day.
- Convene Task Force of government, civic, and business leaders: McAuliffe will convene a Task Force with representatives from across the Commonwealth to produce revenue-neutral proposals that give localities the ability to significantly reduce or eliminate all three of these anti-growth taxes. The Task Force will give Virginia localities the authority to find locality-based solutions to replacing these three taxes with plans that make sense to each community and encourage industry and business growth.
- Protect localities reliant on revenue streams: While these taxes impose unnecessary burdens on Virginia’s businesses, our communities are reliant on this revenue. As Governor, McAuliffe will only accept plans put forward that are revenue neutral, so communities can continue to provide Virginian families with the education and resources they need and avoid an increase in the total local tax burden.
The benefits would be extensive:
- Reduce bureaucratic nightmare for businesses that have to deal with these taxes and instead focus on encouraging startup and business growth.
- Increase growth and employment by replacing anti-growth taxes with revenue-neutral solutions.
- Allow businesses to expand more easily by creating a more predictable local tax structure that doesn’t punish companies who are expanding operations and creating jobs.