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Posted at 10:07 AM ET, 12/10/2009

A Va. tax provision you should know about

By editors

By Kim S. Uttenweiler
Stephens City

Regarding the Nov. 29 Metro article “Fairfax hungry for more revenue”:

As the treasurer for a small town in the Shenandoah Valley, I know that local jurisdictions need to seek out additional sources of revenue if we are to have any hopes of continuing services for our residents.

I wish to draw your attention to a little-known tax provision in the Virginia Code — 58.1-2606. This law dates back several decades and exempted railroads from paying the personal property tax rate on their business property. Instead they got to use the much more advantageous real property tax rate. It was no time at all before the public utilities climbed on board, and they, too, were allowed to use the much lower tax rate on all personal property save motor vehicles.

Washington Gas Light, Dominion Power, Verizon, Comcast and all other public utilities pay much less than their fair share of taxes, and, therefore, the tax burden shifts to private businesses and taxpayers. In other words, I tax Aunt B’s Pies 50 cents per $100 assessed value of her baking sheets, but Verizon only pays 7.6 cents on all the computer and switching equipment in its building on School Street.

As a treasurer, I must tax these utilities for pennies on the dollar that they morally should be paying. I have no choice. It’s time the public learned more about this dodgy little tax provision.

By editors  | December 10, 2009; 10:07 AM ET
Categories:  Virginia, taxes  
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Kim -- so, what can we do to change this law other then voting? I am willing to assist you with this greed.

From Warrenton,VA

Posted by: PittChix | December 10, 2009 7:42 PM | Report abuse

Well, let's not get so emotional here. I would ask, "Why is that provision in place?" I suspect it is because the legislature has recognized that utilities and railroads have to invest huge amounts in infrastructure, across the state, to do their jobs. The propoerty is more or less permanently attached to the ground (think electrical transmission lines, rail lines, pipelines) so it is logical that this is the rate that should be charged. Aunt Bea's cooking sheets aren't attached to the ground. In addition, the prices both railroad and utility companies can charge is strictly regulated, so that the utilities and railroads can make a reasonable, but not huge profit. If you repeal these provisions, you're going to have the companies asking the State Corporation Commission for permission to raise the rates to cover these new, unanticipated expenses, and if the SCC refuses, they'll sue, and win. So what would happen is that transportation and your utilities will cost more, plus everything that relies on having power, or gas, or oil.

It would be a huge backdoor tax increase with a ripple effect. And those baked goods are going up in price too, takes gas to run those ovens, and you've just made it so much more expensive.

Posted by: ggreenbaum | December 10, 2009 8:23 PM | Report abuse


You're right about utilities, but I am pretty sure that there are few to little financial regulations left for railroads (somebody correct me if I'm wrong here). Nevertheless, given that railroads are the most fuel efficient means of moving anything, a reasonable public policy might leave this implicit subsidy in place.

Posted by: Wallenstein | December 11, 2009 9:55 AM | Report abuse

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