Problematic Tax Bills Defeated; Cigarette Taxing Authority Legislation Carried Over to 2019

February 5, 2018

On February 2, the House Finance Committee’s Subcommittee #3 took up several bills of concern to localities.  HB 471 (Reid), as amended in a previous hearing by the House Commerce and Labor Committee, exempts certain new small businesses from the local option sales tax and from local business license taxes for their first five years of existence.  VACo and VML opposed the bill as a mandate on localities.  Local governments already have the authority to provide an exemption from local license taxes for new businesses for their first two years in operation in a locality.  The bill was recommended to be passed by indefinitely.

HB 256 (Guzman), as introduced, mandates a local real property tax exemption for certain solar equipment and provided a state income tax credit to reduce the up-front installation costs of the equipment, subject to individual and aggregate statewide caps.  VACo and VML worked with the patron to remove the local mandate, but subcommittee members voted to pass the bill by indefinitely due to concerns about the effect of the proposed income tax credit on state revenues.

HB 1338 (Campbell) authorizes counties to impose a tax on cigarettes at a rate of 5 cents per pack or the amount charged by the state, whichever is greater, provided that the voters approve the tax in a referendum.  The bill was continued to 2019 at the request of the patron. A companion Senate measure, SB 510 (Carrico), was similarly “carried over” in the Senate Finance Committee.  It is anticipated that proposals to enhance county taxing authority will be considered in the coming months, likely in the Joint Subcommittee on Local Government Fiscal Stress.

VACo Contact: Katie Boyle

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