Special Subcommittee on Business Tax IncentivesSeptember 15, 1998, Richmond
BackgroundThe Special Subcommittee on Business Tax Incentives of the House Finance Committee held its first meeting to begin gathering information on the Commonwealth's business tax incentives. The subcommittee was appointed as a result of legislation coming out of the 1998 Session, which provided a tax credit and an alternate tax credit against corporate income for the purchase of machinery and equipment used exclusively in or on the premises of manufacturing facilities or plants which manufacture, process, compound or produce items of tangible personal property from recyclable materials for sale.
Some manufacturers in the recycling business think the alternate credit treats a certain company more favorably, thereby creating unfair competition. This, however, was just the catalyst for requesting an examination of not only this tax credit but also the other 17 tax credits available to businesses in the Commonwealth.
The main concern expressed during the initial meeting was how to continue to entice new businesses into the state with a variety of incentives without hurting the businesses that are already in Virginia and have been good corporate citizens. All agreed that this is a tough balancing act and one which the manufacturers in particular believe has tilted in favor of the new businesses moving into the Commonwealth.
Manufacturers' SuggestionsA number of suggestions were made by a representative from the manufacturers that produce tangible personal property from recycled materials and by a Virginia Manufacturers' Association representative. The suggestions included an investment tax credit, double weighting the sales factor in the apportionment formula for Virginia corporate income tax, aid with infrastructure, a tax credit for recycling by-product disposal methods, a state administrative appeals process for local business taxes (like the current BPOL tax appeals process), and direct financial aid to businesses that have demonstrated direct economic loss as a result of incentives provided to competitors.
It was also reiterated that nothing should be done to harm existing businesses in an attempt to bring in new business. Also, any law should be easy to administer, reflect the current marketplace changes, and be applicable to all businesses.
Future MeetingsThe special subcommittee's next meeting will be on October 29th at 10:00 a.m. in Richmond. At that time, representatives from the manufacturing business community will present more definite ideas and solutions to the concerns they raised. The special subcommittee hopes to develop its recommendations, if any, at that meeting.
The Honorable Joseph P. Johnson, Jr., Chairman
Legislative Services contact: Joan E. Putney