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Posted at 12:56 PM ET, 11/19/2010

Alexandria may cut license tax

By Christy Goodman

Alexandria officials are looking into how to provide some relief to business owners if they opt to include a transportation add-on tax in the fiscal 2012 budget.

City officials have said a reduction to the Business, Professional and Occupational License Tax, or BPOL tax, could soften the blow to commercial properties that would have to pay the add-on tax. BPOL taxes are levied on the gross receipts of a business of $100,000 or higher. Businesses with gross receipts lower than the $100,000 threshold pay a lump sum of $50.

BPOL taxes are set at different rates for different types of business services, such as professional or retail, which would allow the city "to tailor a package that is unique to Alexandria's business base," said Vice Mayor Kerry J. Donley.

Throughout the preliminary budget discussions, it has been made clear that "the reduction is not going to be a dollar-for-dollar offset," Donley said.

A transportation tax, as passed by the 2007 General Assembly, must be used specifically for new projects and to buy new stock, such as new buses, said Rich Baier, Alexandria's transportation chief. The maximum tax of 12.5 cents per $100 of a commercial property's assessed value would raise about $11 million in Alexandria, he said.

A March 2008 report from a group studying reductions of the BPOL for a possible add-on tax would be the starting part for this year's discussions, said Bruce Johnson, the city's chief of finance. The report suggested raising the gross receipts threshold to benefit small retailers or decreasing the retail rate of 20-cents per $100 in receipts by a few cents, which would end up benefiting larger retailers.

A one-cent reduction to the retail BPOL tax would equal about $230,000. A one-cent reduction to the professional services BPOL tax, which is 58-cents per $100 of gross receipts, would equal $100,000, according to 2010 budget memos.

By Christy Goodman  | November 19, 2010; 12:56 PM ET
 
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Comments

Donley please run for mayor!!!!!!

Posted by: wujjs | November 19, 2010 1:34 PM | Report abuse

If "the reduction is not going to be a dollar-for-dollar offset" as is quoted, how can it possibly be construed as a cut? Raising taxes by $1000 and cutting another by $80 isn't a tax cut.

Posted by: getjiggly1 | November 19, 2010 2:52 PM | Report abuse

The previous comment is exactly correct. City Council wants to INCREASE commercial property taxes by a whopping $11 million; but they're now proposing only a token cut in a separate business tax.

And that's a bad deal for Alexandria city taxpayers as well. The new commercial property tax would have to be used for "new transportation projects" - which means helping Arlington to fund the expensive (and unnecessary) streetcar to Crystal City.

But a cut in the BPOL tax would reduce general revenues available to Alexandria City government - which could in turn lead to another increase in other general city taxes.

This is a transparent effort by Donley and allies to buy off growing business opposition to the foolish streetcar project. Let's hope a few members of City Council will stand up to his ill-advised tax-hiking plans.

Posted by: jrmil | November 19, 2010 6:05 PM | Report abuse

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