HB 380 (Freitas) would prohibit any county, city, or town from imposing any license tax or fee in any taxable year beginning on or after January 1, 2023, with the exception of coal and gas severance taxes that are levied as license taxes. VACo is opposed to the elimination of this local revenue source, which is imposed by 48 counties and generated $466 million in county revenue in FY 2020. VACo has historically opposed restrictions on the imposition of business, professional, and occupational licensing (BPOL) taxes without a corresponding replacement in revenue; HB 380 does not replace the lost revenue.
The authority to impose BPOL taxes is already subject to certain limitations. A series of categories of businesses spelled out in Code are exempt from BPOL taxes (such as certain news publications, manufacturers, and insurance companies and banks). For localities with populations greater than 50,000, businesses with gross receipts less than $100,000 are not subject to BPOL taxes; businesses with gross receipts of less than $50,000 in localities with populations between 25,000 and 50,000 are similarly exempt from taxes (although these businesses may be subject to capped license fees). For those businesses subject to BPOL taxes, rates within each category of business are capped. In order to provide greater uniformity in administration, local BPOL ordinances must be substantially similar to statutory provisions dealing with the administration of the tax, such as due dates and appeals. Localities may impose the tax on gross receipts or on Virginia taxable income. Localities may exempt, by ordinance, license fees or license taxes on any business that does not have an after-tax profit for the taxable year.
HB 380 has been referred to the House Finance Committee.
VACo Contact: Katie Boyle