Getting together against a controversial business tax

Chamber of Commerce to speak out against a business tax today

Date published: 4/1/2008

BY KAFIA HOSH

Stafford County supervisors have yet to discuss a controversial business tax this year, but local industries already are organizing resistance to the levy.

Stafford is facing a $6.4 million budget shortfall this year, largely due to declining sales and real estate tax revenue. Stafford officials have discussed imposing a Business, Professional, Occupational License Tax as a potential revenue source.

BPOL is a tax on a businesses' gross receipts.

Bob Hagan, president of the Fredericksburg Regional Chamber of Commerce, will speak against the tax at today's Board of Supervisors meeting.

"The Chamber is simply concerned that the issue might come up in conversation without the kind of notice that would give us the opportunity to respond in a timely fashion," he said. "We want to present our case while those conversations are taking place."

Stafford business owners already are facing higher tax bills because of a 28 percent increase in commercial property values during a recent reassessment. The county's proposed 2009 budget includes a real estate tax rate increase from 70 cents per $100 of assessed value to 89.8 cents.

Business owners say they can't afford another tax.

"The tragedy would be, I think, to impose BPOL on top of the devastating increase in real estate taxes for commercial property owners in Stafford," Hagan said.

Stafford is one of the only area localities that does not charge BPOL. About half of the state's counties, most of its towns, and all of its cities have a BPOL tax, according to the University of Virginia's Weldon Cooper Center for Public Service.

The counties of Spotsylvania, Fairfax, Prince William, Loudoun and the city of Fredericksburg charge the tax.

Board Chairman George Schwartz said the need for BPOL is greater now that Stafford is facing a budget deficit and bleak economic outlook.

The Stafford Economic Development office uses Stafford's lack of a BPOL tax as a recruiting tool.

Among Virginia localities, Stafford ranked fourth in new business growth between 2002 and 2007, according to the Economic Development Department.

And Forbes.com, the business Web site, recently named Stafford one of the best places to get ahead because of the county's ability to attract defense contractors and other federal jobs.

WHAT IS BPOL? The BPOL tax is on a business's gross receipts. Localities can set a minimum amount of gross income before the tax would kick in, which could end up exempting mom-and-pop stores. Jurisdictions can set different tax rates for different types of businesses, and don't have to charge the full amount allowed by law. Spotsylvania, for example, charges half the rate allowed. Stafford already charges 14 different business-related taxes. For example, the business property tax is on everything a firm owns, including computers, desks and other materials. POTENTIAL REVENUE If Stafford imposed the full rate at a $100,000 threshold, a BPOL tax could bring in up to $7.8 million a year, according to the commissioner of revenue's office. BPOL would replace the Merchants Capital Tax, which brought in about $800,000 in 2006. State law prohibits localities from charging both taxes.

Date published: 4/1/2008

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