George:

Business Professional Occupational Licenses have been in existence since the War of 1812 when the flat tax helped Va. pay its' share of the war. Around the turn of the century it became a gross receipts tax to help municipalities finance the cost of capital projects, etc.

The tax is a gross receipts tax and is based on all of the gross receipts of a business. Hence adding to it's unpopularity. The tax now accounts for between 4-5% of localities budgets. Charlottesville will take in about 3.7 million from the tax this year based on about 3500 businesses.

In 1996 the General Assembly enacted legislation to provide tax relief to businesses that are starting up. There is now a filing fee based on population. Charlottesville could charge up to $50.00 fee on the first $50,000, but opted to go with a revenue neutral rate that year of $35.00 on $50,000. Anything over that amount is based on four standardized rates. The first year Council provided over $1,000,000.00 in relief to businesses by giving a 1/3 rebate to all businessesin order to avoid a transitional double taxation issue. To the best of my knowledge, Charlottesville is the only locality in Virginia to do so.

The argument is to use the surplus and eliminate the BPOL tax. That is an excellent suggestion. However, as one looks at the overall picture, the CIP budget will need the money for school repair. Repairs to Walker and Buford have been pushed backed to 04, at last glance. Money is not coming from the state and much of that money is from the lottery.

There has never been any solid alternative to the tax. We have over 13,000 parcels of land in Charlottesville as compared to 3,500 businesses. To fund current programs and cut the tax is a double edge sword.

There is a committee looking at the overall tax structure in Va with a report out in 01. It will be interesting to see the solutions. I expect one will be a piggyback tax on state income or raising the state income. BPOL may well become some type of adjusted gross receipt tax.

For now it is all we have to cover the bills. Since we administer the tax I am not taking a position. Just stating the facts.

Raymond Richards (electronic mail, April 25, 2000).