Senate Finance Committee to hear proposal Jan. 18 to change BPOL tax

The Virginia Senate Finance Committee will conduct a hearing during its Jan. 18 meeting that starts at 9 a.m. on proposed legislation (SB 836) that would require localities to base the Business, Professional and Occupational License (BPOL) tax on the Virginia taxable income of a business instead of the current law that gives a locality the option to impose the tax upon gross receipts or Virginia taxable income.

The bill would reduce BPOL revenues by about 95 percent, based on the conclusions of a 2013 study done by the legislature’s Joint Legislative Audit and Review Commission (JLARC), according to a press release from the Virginia Association of Counties, which is urging its members to oppose the change.

VaCO told its members that “because so many businesses would no longer be paying BPOL, the rates would have to increase to 5 percent, which would be an average tax increase of 40 percent on profitable businesses still subject to the tax.”

The association also said in its press release that “Changing the basis of the tax to net income would make the tax more difficult for businesses to understand and costly for localities to administer.”

The VaCO press release further added that “In 2015, localities collected $683.9 million in BPOL taxes. SB 836 does not provide an alternative revenue source. Nor does it include any provisions to reduce local costs in carrying out state mandates in public education and other areas.”

State Sen. George Barker, who represents part of Prince William County, is a member of the Senate Finance Committee.