The Virginian-Pilot
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VIRGINIA BEACH
The City Council plans to phase out a business tax over the next three to five years, a move Mayor Will Sessoms said is designed to helpattract new companies and create jobs.
The machinery and tools tax, which is paid by about 200 manufacturing businesses, is estimated to generate $1.46 million in city revenue this fiscal year.
"It's a hindrance to bringing new jobs into the city," Sessoms said. The tax will be cut by a minimum of 20 percent a year until it's gone, he said.
No council members objected to the plan announced at a Tuesday workshop.
Councilman Harry Diezel said he wants the city to keep track of any new jobs created so he'll know if the tax cut worked.
The elimination of the tax is a reversal from 2008, when the City Council voted to almost double it, then repealed the decision after Stihl Inc. complained to then-Mayor Meyera Oberndorf. Stihl, which makes power tools, pays more taxes on tools and machinery than any other Beach business - around $500,000 a year.
Sessoms said he hopes lost city revenue would be replaced by increased tax revenue driven by business growth.
The machinery and tools tax is a relatively small revenue stream. The city's hotel tax is estimated to bring in about $23 million this year. The restaurant tax is predicted to generate $48 million.
The tax is $1 per $100 of one-third the value of a company's tools and machinery. A company with $100,000 in such assets would pay annual taxes on $33,000, or $330 in taxes.
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Don't worry
They will make up the difference by raising the real estate tax rates on the citizens of VB to cover the loss and to pay for the light rail boondoggle at the same. Expect to read in the paper the notice on the public hearing very soon. Then the tax and spend cheerleaders will justify it, because RE tax rates are lower. Shame game again.
Wow!!!
Virginia beach giving up tax money holy cow!!!!Thought that was a miss print.
Good Decision
Good decision - now, can you reduce my property tax?
this is a great idea
This is a great way to bring companies i.e. jobs to Virginia Beach.
OK, who is next?
Virginia Beach has all but assured that any industry locating in SE Virginia will do so in their city unless others follow suit.
Now, who wants to be the Health Care center of SE Virginia by dropping the BPOL tax, which is as unjust to health care professionals as the machinery and tools tax is to industry?
Let the bidding begin!
It about time our cities look at businesses as valuable contributors to our economy and not just cash cows to be milked dry to pay for bloated government spending.
Congratulations
For many years, VBTA and its chairman, John Moss, have appeared before council to remove the Machine and Tool Tax to no avail. So VBTA members are indeed appreciative with the councils decision, however, if we are really serious about having a receptive environment for our 30,000 small businesses, we need to follow suit with terminating the BPOL tax, particularly, given the serious financial implications of this inequitable tax. In addition, if council is indeed serious about dropping the Machine & Tool tax, why impose a max of a 5 year window to phase out a financial burden that is just plain abusive. Our struggling companies genuinely need a more efficient timetable. Council, how about reducing the window to phase this tax out by no more than two years using the next budget cycle as the kick off date. Thank you
I favor the elimination
of this tax, as well as the BPOL tax. Now, will you reduce your prices accordingly to your consumers? If not, Council has merely increased your net profit.
Tool tax
I don't think tools or machinery can operate without operators , or in this case employees.
The tool tax is collected once a year , employees keep on giving . Makes sense to me.
Sessoms said he hopes....
Hopes. Has no idea, but he hopes.
Just another payback to the business community that paid to put him in office.
Dance puppet....dance.
It's real hope
He's hoping this ridiculous tax will draw business. Only a control freak would demand they come. This is real hope, not false hope.