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Local Issues

Chesterfield County BPOL (Business Professional Occupational License) Tax Relief Funding

The Chesterfield County Board of Supervisors approved the County’s annual budget on Wednesday April 11th, which included funding for up to $.04 reduction in the BPOL rate for retailers who have gross receipts of $3.5 million or less. Retailers over $3.5 million will continue to pay $.19 cents per $100 of gross receipts, which is still the most favorable BPOL rate in the region.

Retailers who own businesses in Chesterfield County should call each member of the Board of Supervisors and sincerely thank them for including BPOL relief funding for retailers in their budget and encourage them to use that funding to lower the BPOL rate for small retailers from $.19 to $.15 per hundred. Please reiterate that retailers need to have a lower rate than professionals or service businesses because they pay BPOL tax on their inventory investment. Click here to contact the Chesterfield County Board of Supervisors.

State Issues

Sales Tax Holiday, August 3rd, 4th & 5th

Tax Bulletin 07-5 - Important information Regarding Advertisements for the Absorption of Sales Tax
Click here to read the Bulletin >>

General Assembly Wrap Up

Will the 2007 General Assembly be remembered by what Retailers got or didn’t get? We knew going into Session that transportation and electric re-regulation would be major topics. We didn’t know that the smoking issue would catch “fire”. We didn’t have any idea at the beginning of the Session that by the end of 46 days, retailers would have not one but two new sales tax holidays. This Session may simply be remembered as typical election year politics.

What did Retailers get?

• BPOL Exemption. Senator John Watkins, SB772 and Delegate Harry Purkey, HB1695, introduced legislation that exempts motor fuel tax from being included in gross receipts when paying the BPOL, (business professional occupational license tax).
• Sales Tax Holiday for Energy – Efficient Products. Senator Watkins also sponsored SB867 that created a four day sales tax holiday for energy efficient products. Delegate John Cosgrove sponsored the companion bill, HB1678, in the House.
• Sales Tax Holiday for Hurricane Preparedness. Senator Ken Stolle sponsored SB1167 that creates a 7 day sales tax holiday for hurricane preparedness products, beginning each year on May 25th, starting in “2008”.
• Electric Re-regulation. Senator Tommy Norment sponsored SB1416 and Delegate Clark Hogan sponsored HB3068 that re-regulated the electric industry. The RMA lobbied to maintain the ability to aggregate on behalf of its members when competition is available. Click here for a summary of re-regulation >>
• Minimum Wage “Increase”. Senator Walter Stosch sponsored SB758 and Delegate David Englin sponsored HB2738 that repealed the existing exclusion for persons who have reached age 65 from the definition of an employee under the Virginia Minimum Wage Act. The bill will go into effect July 1st and after that date you must pay someone over 65 years old the minimum wage.
• Smoking Prohibited in Restaurants. Delegate Morgan Griffith sponsored HB2422, which would have prohibited smoking in restaurants unless a sign was posted at all entrances stating “smoking permitted”. This bill passed the House and the Senate; however the Governor offered amendments that were rejected by the House of Delegates during the Veto Session. The Governor has now vetoed HB2422, therefore restaurants will continue having smoking and non-smoking areas. It is certain that the smoking issue will be back.

Click here for a complete list of legislation of interest to retailers that passed >>

What Retailers didn’t get.

• Minimum Wage Increase. There were a number of bills introduced this session that would have raised the Minimum Wage and created a state minimum wage. The RMA legislative policy for minimum wage states:

  "The RMA opposes any additional increase in the federal minimum wage and supports both youth and training differentials.  The RMA believes that any additional increase at either the federal or state level in the minimum wage would substantially contribute to unemployment, particularly among teenage workers.  Expanded job opportunities would be created for teenage workers if a lower wage rate were prescribed for them."

  Two additional reasons for opposition this session were: (1) The House of Representatives and the Senate have a bill that will raise the minimum wage to $7.25 and the Senate version includes tax credits which are designed to soften the blow of the wage increase to small businesses. (2) The legislation before the General Assembly would have established a State Minimum Wage. In the past the General Assembly has adopted the Federal Minimum Wage as the State Minimum wage.
• Computers and Computer related equipment added to Sales Tax Holiday. Delegates McClellan, HB1659, and Cline, HB2167, sponsored bills that would have added computers and computer related equipment to the Back to School Sales Tax Holiday exempt items. The RMA agreed during the 2006 session, before the Senate Finance Committee, that we would not lobby for additions to the Sales Tax Holiday until the Department of Taxation could provide figures to support the addition of these items.
• Separate Classes of Real Property for Taxation. Delegate Robert Marshall, HB1672 and Delegate Kenneth Alexander, HB1730, sponsored legislation that would have allowed localities to establish different rates of taxation on Real Property. The RMA opposed the legislation due to the possibility that commercial properties may pay higher property taxes than other categories.
• Vehicle Sales and Use Tax Increase. Delegate Robert Brink sponsored HB2071, that would increase the motor vehicle sales and use tax from 3% to 5%.and dedicate the revenue generated to transportation.

Click here for a complete list of legislation of interest to retailers that failed >>

FEDERAL Issues*

© 2007. NRF Enterprises, Inc. used with permission.*

• House Panel Ties Minimum Wage Tax Relief to Iraq
• Retailers, Congress challenge rising credit card fees
• Big employers enter health care debate as costs rise

House Panel Ties Minimum Wage Tax Relief to Iraq

A House committee this week tied a federal minimum wage increase and related small business tax relief to a Democratic proposal to pull troops out of Iraq, despite pleas from NRF and prominent lawmakers to keep the issues separate.

The House Appropriations Committee voted 37-27 along party lines Thursday to approve a $124 billion emergency supplemental spending bill that would provide additional funding for the war but also require that troops leave Iraq by September 2008. The measure is opposed by Republicans, and the White House has said President Bush would veto the bill.

In addition to addressing Iraq, the bill includes a wide range of unrelated provisions ranging from children's health insurance to money to fight forest fires.

Among the provisions is language that would increase the $5.15 federal minimum wage by $2.10 over the next two years and provide $1.8 billion in tax relief. The language mirrors wage hike and tax relief bills passed earlier this year by the House. The Senate has passed the same wage hike but the two chambers have been in deadlock because the House tax relief package is a fraction of the $8.3 billion offered by the Senate to offset the increased payroll costs.

The House proposal would extend the Work Opportunity Tax Credit widely used by retailers for one year (compared with five years under the Senate bill), includes the Senate's one-year extension of small business expensing, and addresses restaurant tips. It leaves out Senate language that would let retailers who own their stores depreciate remodeling over the same 15 years as those who lease their stores rather than the current 39 years.

Thursday's action came despite a letter from NRF to both Democratic and Republican leadership in the House and Senate urging lawmakers not to entangle the wage hike/tax relief issue in the politically charged debate over Iraq.

"Important differences on H.R. 2 should be resolved on their merits without being subsumed in other, unrelated legislation, including the pending supplemental appropriations bill providing funding for the war in Iraq," NRF Senior Vice President for Government Relations Steve Pfister said. "We urge you to continue direct negotiations between the House and the Senate on this issue."

"The White House has already said the House proposal doesn't provide enough tax relief to help small businesses handle the increased payroll costs of a wage hike," NRF Vice President for Government and Political Affairs Rob Green said. "Attaching a proposal the President doesn't like to a bill be plans to veto does nothing to move forward on this issue. The House and Senate should negotiate in good faith and adopt the balanced package passed by the Senate."

Appropriations Committee Ranking Member Jerry Lewis, R-Calif., asked, "What does (the package of unrelated provisions) have to do with the global war on terror?" Senate Minority Leader Mitch McConnell, R-Ky., said including the minimum wage hike and business tax provisions was "not a good path to take." Senate Minority Whip Trent Lott, R-Miss., agreed, calling the move "the worst kind of activity" and saying Senate Republicans would fight "very aggressively" to remove them.

Pfister's letter urged the House and Senate to work together to enact the Senate package, saying "careful consideration" by the Senate Finance Committee led to a "balanced and bipartisan bill" that recognized the economic pressures a minimum wage increase would place on small businesses.

In separate action on Wednesday, the House Ways and Means Committee held a hearing where witnesses criticized revenue-raising provisions of the Senate proposal. Committee member Representative John Lewis, D-Ga., said the session was intended to "send a message to the Senate" before negotiations over a final wage hike/tax relief bill begin.

Retailers, Congress challenge rising credit card fees

Increasing credit card fees have created friction between card issuers and retailers, although credit card companies insist their fees are justified by the increased consumer perks their systems provide. Congressional leaders are discussing legislation that would limit interchange fees, as small businesses say the higher costs are causing them to raise prices and, in some cases, could force them to close up shop. Los Angeles Times

Big employers enter health care debate as costs rise

With medical costs on the rise, many top executives are speaking out on health care reform and calling for a national approach to fix the system. While some support a complete shift to government-directed medicine, most want broad changes in the employer-subsidized health system. The New York Times

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