THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, January 5, 1997 TAG: 9701040014
SECTION: COMMENTARY PAGE: J4 EDITION: FINAL
TYPE: Opinion
SOURCE: By SAM T. BARFIELD
LENGTH: 60 lines
Recently, Virginia state Sen. Charles Colgan of Manassas suggested that personal-property taxes be eliminated. When asked how the lost revenue would be made up, he suggested that the state sales tax be increased and the increase sent to the locality.
For several years, the Chamber of Commerce and most business groups have lobbied the General Assembly for elimination of BPOL (Business and Professional License). When asked how the lost revenue would be made up, the answer was the same: Increase the state sales tax.
I suppose it's only human nature to despise taxes and want to rid ourselves of all of them - even though we know the burden will be picked up by the other fellow. An example would be to eliminate the personal-property tax on my car and increase the sales tax so that someone else could pick up part of the tab.
Let's take the license tax off business and let someone else pay it through the sales tax. I have heard every argument on this, and none of them are valid. The average BPOL tax is less than 1 percent and is cheaper than a person's rent, labor costs and insurance. In all of the debates, I haven't had one business person tell me that he plans to cut his prices if the tax is eliminated.
It is time now for all of our citizens to look at this promise of a ``tax cut'' for what it is - an effort to shift the burden to someone else. It is a typical political game that has been played since man decided to establish a government and devised a series of ``taxes'' to pay for it.
Let's look at some facts before buying this ``pie in the sky'' tax cut. in Norfolk, in 1996:
Personal-property tax on vehicles produced $26,291,627; business personal-property tax produced $9,909,627; business-license tax produced $14,214,514; for a total to the city of Norfolk of $50,415,999.
The Virginia sales and use tax is presently 4 1/2 percent, and from this tax source, Norfolk received $21,338,850. (An additional 1 percent, based on school-age population, was returned to Norfolk and is dedicated to the schools. This total was $21,104,494.)
How much would the sales tax have to be increased to make up our revenue loss, as well as that of all the cities, counties and towns - 2 percent? 3 percent? 4 percent? Even after the mathematics are worked out, what happens to the localities' revenue if there is a drop-off in sales, or if the state suffers high delinquency rates in any one year? Suppose the state decides that it doesn't have sufficient funds to remit to the city in some future year? Norfolk's charter requires that it adopt a balanced budget each year. It will be impossible to do so under such uncertain conditions.
Advocates of a sales-tax increase often use Florida as an example of a state without a personal-property tax. According to the Florida Tax Department in Tallahassee, Florida has a sales tax of 6 percent, to which counties may add another 1.5 percent - a total of 7.5 percent - which is almost totally paid by by the thousands of tourists who are there year-round. Norfolk doesn't enjoy such a luxury.
Remember: The average personal-property tax bill is between $350 and $450 and is paid once each year. The sales tax, on the other hand, is a continuing tax assessed against everything we purchase - food, clothing, furniture, etc. - throughout the year. MEMO: Sam Barfield is Norfolk commissioner of the revenue.