A Virginia bill aimed at eliminating tax exemptions for several industries passed in its first reading before the House of Delegates Saturday.
The bill, sponsored by Del. Phil Hamilton, R-Newport News, is one of several proposals intended to remedy Virginia's budget, which is expected to fall short by $1.2 billion dollars over the next two years. Education, Medicaid and the prison system are institutions likely to be hardest hit by the shortfall, Warner Spokesperson Ellen Qualls said.
The bill would tax previously exempt industries in several different major categories, such as airlines, ship-building and public utilities, including over 400 Virginia businesses, said Del. Mitchell Van Yahres, D- Charlottesville.
Despite commonly stated desires to resolve the budget shortcomings, some politicians are worried that Hamilton's bill is not a sufficient solution.
"It eliminates 13 tax exemptions for mostly businesses," Qualls said. "The debate is whether it's fair to raise that much money off a handful of industries to help solve the budget crisis."
Though the bill's supporters claim that the bill will raise $520 million over the next two years, skeptics warn that the numbers may not be accurate.
"We do not have solid numbers," Van Yahres said. "We don't know the economic impact of this thing, either. It may reduce jobs in some industries."
The proposed bill may indirectly place the burden on Virginia consumers as the industries no longer tax exempt would raise prices to compensate, Qualls said.
Unlike the House bill, Warner's own tax proposal would raise new revenue from a variety of new sources, including an increase in the cigarette tax and stricter regulations on the collection of tax on Internet retail sales, Qualls said. That new revenue would also contribute to an overall decrease in Virginia income tax, she added.
"The house bill is not a comprehensive reform of the tax system," Qualls said. "The governor's proposal is comprehensive."
Hamilton's bill is moving through the House at a fairly rapid rate. The bill was introduced unexpectedly Friday to the Finance Committee, which acted on it within two hours, Van Yahres said.
"The governor is concerned that the House bill has not been studied enough yet to be considered by the full house," Qualls said.
The House bill will go on to a second reading early this week and faces a final reading there before being sent to the Senate for consideration and possibly being worked into a final state budget proposal, she said.
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