Joint Subcommittee to Study and Revise Virginia's State Tax Code

HJR 60 (2002)
HJR 685/SJR 387 (2001)

May 29, 2002

The joint subcommittee appointed to study and revise Virginia's tax code met in Richmond and formally adopted tax principles intended to guide the joint subcommittee in its work to revise Virginia's tax code. In addition, staff to the joint subcommittee gave a brief presentation that involved answering questions raised at April's meeting and explaining several new items of information distributed to subcommittee members. One of the items discussed was the assignment of subcommittee members and issues for study to two different task forces. Task Force #1 and #2 were created to study all of the tax and other issues identified as subjects of study at the April meeting. The work of each task force is, for the most part, intended to be mutually exclusive of the other.

At the conclusion of staff's presentation, the full subcommittee meeting ended and both Task Force #1 and #2 met to discuss the issues assigned to them.

Tax Principles Adopted

The joint subcommittee formally adopted tax equity, efficiency, adequacy, and predictability as principles to guide its work in revising the tax code. These are the same principles that were discussed at length in the April meeting of the joint subcommittee.

Much debate preceded the adoption of these tax principles. One of the questions debated was whether the end result of all final recommendations should be revenue neutral in nature; that is the net effect of all recommendations would neither increase or decrease the Commonwealth's total annual revenue. The joint subcommittee ultimately agreed that its recommendations should be revenue neutral.

Staff Presentation

Staff provided several new pieces of information for joint subcommittee members to consider in upcoming meetings. These included information on the cost of administering taxes collected by the Department of Taxation, Department of Motor Vehicles, and State Corporation Commission; the additional annual cost in increasing Virginia's personal and dependent exemption (in $100 increments); and the Department of Taxation's Analysis of Sales and Use Tax Exemptions in Virginia.

Task Force #1 Meeting

Task Force #1, chaired by Senator Hanger, began its first meeting by reviewing its list of issues. Those issues include several that deal with the state income tax, to what extent Virginia should conform with federal tax law, the local property tax on personally owned vehicles, telecommunications taxes, the sharing of income tax revenues with localities, and the equalization of the taxing authority granted to counties and cities. After reviewing the issues, the task force members decided to focus on the state income tax issues at its next meeting on June 24 and take up the remainder of the issues on July 16.

Task Force #2 Meeting

Task Force #2, chaired by Delegate McDonnell, began its first meeting by reviewing its list of issues and discussing certain sales and use tax exemptions, as reported in the Department of Taxation's Analysis of Sales and Use Tax Exemptions in Virginia. Among the issues to be considered by the task force include current exemptions from Virginia's sales and use tax, extending Virginia's sales and use tax to certain services, conformity with federal law repealing death and estate taxes, elimination of the BPOL tax, and additional revenue opportunities for local governments.

The task force asked for additional information on sales and use tax exemptions of public service corporations. The task force also asked for more information on the applicability of Virginia's sales and use tax to services.

Any recommendations that the members of the two task forces develop are to be presented to the full joint subcommittee at its meeting on August 19.

Next Meetings

Task Force #1 will next meet on June 24. Task Force #2 will next meet on June 26. Each meeting will begin at 1:00 p.m. and will be held in House Room C of the General Assembly Building.


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