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

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

July 16, 2002

Task Force #1

Task Force #1 held its third meeting on July 16, 2002 at 10:00 am.

The committee’s meeting began with a presentation on the Earned Income Tax Credit from Bob Zahradnick, a policy analyst with the Center on Budget & Policy Priorities.

The task force came to a consensus that a state earned income tax credit is not an option. Instead the group is looking toward an aggressive approach to deductions and changing the rate structure. Additional discussion ensued around removing the sales tax from food.

Following the EITC speaker, the task force began its work session, picking up where it ended its June 24th meeting. The task force began its session with a discussion of the fiscal impact associated with a 100% repeal of the personal property tax to include personal vehicles, business vehicles as well as machinery and tools.

Staff gave a brief update on the work of the Telecommunications subcommittee chaired by Delegate Preston Bryant. The subcommittee will continue its work by looking at the changes recently made in other states including Florida, North Carolina and Illinois and will report to the joint subcommittee studying the state tax code later this year.

The following issues, identified during previous task force meetings, were presented by Staff and discussed by committee members:

  1. Appropriate mix of general fund taxes.
  2. Distribution of a portion of the state’s annual individual income tax revenues to localities.
  3. Constitutional amendment requiring a sharing of state individual income tax revenues with localities.
  4. Maintenance of a low tax burden on businesses
  5. Tax incentives for economic growth.
  6. Equalization of the taxing authority of counties and cities.
  7. No new unfunded mandates on local governments by the Commonwealth.
  8. Creation of a tribunal, not located within or reporting to the Department of Taxation, to hear taxpayer appeals.
  9. Creation of a permanent body to analyze, on a continuing basis, the fiscal needs and resources of Virginia’s state and local government.
  10. Tax Simplification ---more user friendly.
  11. Local user fees.

An additional subcommittee was formed to look at issues four and five, specifically the preferences (subtractions, deductions, exemptions, tax credits) outlined in the Code. The subcommittee will review the preferences and determine whether they are still effective or obsolete. The task force discussed issue six at length and requested additional information about state funding for counties and the difference in services offered between counties and cities.

Several questions were raised by the task force for its next meeting and a request that a representative from the Morris Commission come to explain issue nine, creation of a permanent body to analyze the fiscal needs and resources of state and local government. In addition, the discussion of local user fees and the administrative procedure for tax appeals was placed on the agenda for the next meeting. To date, the task force has received a wealth of information and intends to formulate more concrete policy statements and legislative proposals at its next meeting.

The full joint subcommittee had previously scheduled a meeting for August 19, 2002. Task Force #1 and Task Force #2 agreed that more work needed to be done on their respective issues. As a result, the separate groups will meet and members will be polled for another date for a joint meeting. Task Force #1 members also agreed that public hearings would have to occur later in the year (possibly in October) than previously discussed due to the extended work sessions.


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