JCC Supes Will Look at Lowering Business Tax Rates

JCC Supes Will Look at Lowering Business Tax Rates

Wednesday, January 26, 2011

James City County Supervisors agreed it would be a good idea to take another look at the county’s business tax rates after a local dentist complained that they were unfair to certain types of businesses.

The county’s Business, Professional and Occupational License (BPOL) tax rate limits for various types of businesses were set by the state in 1978. The rate caps were set after the state commissioned a study of profit margins for various businesses, with assumption that this would mean businesses will pay equally as a percentage of their profits. The state set the upper limits, but localities can choose to lower rates.

Earlier in the month, local dentist Dr. Cory Butler addressed supervisors at their regular meeting. He said he felt his BPOL taxes were set unfairly high compared to other businesses, and he said other doctors have considered looking somewhere else to do business where the fees weren’t as high.

For businesses making less than $100,000 per year in gross receipts, the county doesn’t differentiate between types when assessing business fees.

For those making $100,000 and over, the county sets the tax rate at the highest allowed for each type by the state: $.58 for every $100 of gross receipts for professional services (such as medical practices, real estate businesses and financial services); $.36 per $100 for repair, personal and business services; $.20 per $100 for retail, $.16 per $100 for contractors and $.05 per $100 for wholesale. Utilities pay $.50 per $100.

In 2010, James City County collected over $5.2 million in BPOL taxes just for businesses making $100,000 or more.

Of that, almost $1.7 million came from retail businesses; more than $1.3 was collected from repair, personal and business services; more than $1 million came from financial, real estate and professional services; over $800,000 came from contractors and over $116,000 came from wholesale businesses. Utilities paid over $182,000.

York County has the same rates for businesses that make $100,000 or more per year in gross receipts. Williamsburg, according to their website, charges the tax based on gross receipts of $4,000 or more.

At their budget retreat Saturday, James City County Board of Supervisors Chairman Mary Jones said, due to the complaint about the unfairness of the tax and because the standards were set long ago, she would like the county to look at the various BPOL rates again.

She cited the Greater Williamsburg Chamber and Tourism Alliance’s recent survey of business operators in which respondents said one of the biggest disadvantages to working in the county was the cost of doing business.

Supervisor Jim Kennedy agreed, but he cautioned that, should the county lower some of the BPOL rates to make them fairer, other localities might adjust their rates, too, and make James City County no longer as appealing in that regard.

Supervisor John McGlennon said he it would be a good opportunity to examine the rates, but that the county needed to keep in mind that revenues are needed to pay for services residents rely on.

Comments

+5 #5 Guest 2011-01-27 09:11

In good times, people will go along with whatever local taxing authority's do without much thought. When bad times come, it is amazing that people wake up to what has been done to them. I don't wish bad times on anyone but I do wish you take this opportunity to remain concerned with where your tax money is spent.

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-1 #4 Guest 2011-01-27 08:18

All of you professionals should count your blessings. Try being in the Restaurant & Hotel business. We pay a 5% meal/room tax to the locality and a 5% sales tax to the state. Thats on gross receipts, not net profit after expenses. Our costs can jump 50% in a month and we cannot change prices that much and we get squeezed. When we do raise prices, the state and locality make more money on gross sales but we are still losing money. So everyone should count their blessings, unless everyone is in favor of a flat tax across the board on every sale or service provided. Now thats an equitable idea.

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+3 #3 Guest 2011-01-26 15:01

The BPOL is the worst kind of tax. A business tax should be based on revenue after expenses. The way the BPOL works, a business could have a year in which they lose many thousands of dollars yet they still have to pay a substantial BPOL tax. Conversely, they could make a great profit and the tax would only be marginally higher. It's always been wrong-headed.

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+5 #2 Guest 2011-01-26 09:19

Basing a tax on gross receipts is by far the worst kind of taxation. It does not take into account the costs of operating the business. It is not wonder that businesses will look to other more favorable localities if that is practical.

In addition, there is a tax on any new equipment purchased and that tax stays the same regardless of how the equipment is depreciating. A computer purchase for $1000 is taxed continuously at the $1000 level even though after 2 to 3 years it is a "throwaway". This clearly discourages new equipment purchases or, like the cash for clunkers, causes useful equipment to be discarded.

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+2 #1 Guest 2011-01-26 09:08

Thank you Dr. Butler! I have complained about this in the past and have had it fall on deaf ear. BPOL is an unfair tax. It is based upon gross receipts. It doesn't take into account overhead, which tends to be significantly higher for a medical practice than say a real estate agent (comparing just those in the highest bracket). You may also be surprised to know that not all medical professionals pay BPOL taxes. All the doctors that have the hospitals manage their practices are not subject to BPOL since they are not-for-profit. Another reason the private practice MD is becoming a dinosaur.

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