Incentives For New Business In Virginia

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Virginia

By Katherine Schoonover · February 4, 2011 · 717 Comments
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In an effort to encourage business development in Virginia, Delegate Iaquinto, R-Virginia Beach, has introduced HB 1587, a bill that would allow cities and counties to exempt, refund, rebate or provide some other form of relief for new businesses from the Business, Professional, and Occupational License Tax (BPOL Tax) for the first 2 years of their operation in that locality.

“The BPOL tax is imposed on a company’s gross receipts [total revenue] and can be a hefty burden on business owners,” said Delegate Iaquinto.

HB 1587 was introduced at the request of the city of Virginia Beach, which unanimously passed a resolution to include this option in their legislative agenda. After passing similar resolutions, Chesapeake and Herndon were also added to the bill. After a great deal of debate in the House Committee on Finance, the bill was amended to include all cities and counties in Virginia.

The Legislator

During these difficult economic times Virginia has been making every effort to protect jobs and to encourage business development.

This bill is the result of a specific request from the City Council of Virginia Beach whose members have been looking for ways to encourage businesses to move into the city.

HB 1587 is not a mandate but simply an additional economic tool and each locality will be able to determine for themselves if they would like to utilize this tool.

“This bill is an important part of our efforts to bring jobs to Virginia and continues the time-honored, conservative Virginia tradition of creating an environment where businesses can succeed,” said Delegate Iaquinto.

The bill has strong bi-partisan support in the legislature as well as the support of the Virginia Municipal League, Chamber of Commerce, Virginia Retail Federation, Retail Alliance and local governments, including the cities of Virginia Beach and Chesapeake. HB 1587 has already passed in the House (97-2) and will be reviewed by the Senate Committee on Finance.

The Opposition

When HB 1587 passed on the Floor of the House of Delegates there were two votes in opposition to the bill. Delegate Watts, D-Fairfax, and Delegate Cole, R-Fredericksburg.

Delegate Watts expressed concern that there would be no distinction made between types of businesses. “You would be much better off, rather than losing revenue across the board by giving it to all businesses, [to] take the revenue that you have and give incentives to businesses,” said Watts. “I really was concerned about not going at it at a targeted approach in going after the kind of business development that would make good urban planning.”

When asked why he had opposed the bill Delegate Cole said:

“I opposed the legislation because I believe it treats older companies unfairly. New start-up companies would receive a break, but companies that have been in business and paying taxes for years would not. This could put them at a competitive disadvantage.

I understand Delegate Iaquinto is simply trying to help new businesses, but I do not think it should be done at the expense of existing businesses.

Let me also say that I think the BPOL tax is one of the most unfair taxes that is imposed in Virginia, because it is based on gross receipts – so a company could be losing money and still have to pay the tax. The BPOL tax is a job killer that I think actually costs the Commonwealth money in the long run. I favor phasing out the BPOL tax completely.”