As a means of collecting information for the preparation of the final report to the joint subcommittee, The SJR 91 Task Force on State and Local Taxation requests stakeholders to provide responses to the following questions, preferably by e-mail attachment, to legislative staff no later than October 9, 1998.
1. Should the current taxation scheme for electric utilities remain in effect if the General Assembly makes the policy decision to allow retail competition?
No
2. Which mechanisms are appropriate replacement mechanisms for the state gross receipts tax:
a. Corporate income tax on generation.
b. "Declining block" consumption tax
The State Gross Receipt Tax should be replaced with an income tax on the total business in combination with a "declining block" consumption tax. Taxing only revenue from generation would exclude revenue from non-regulated business such as billing and collection, sales of equipment and various types of installation business.
Also, taxing generation income would create a unique type of income tax where only a portion of the income is taxed. Currently we do not have other taxpayers in Virginia that are afforded this type of special treatment.
3. Should the "declining block" consumption tax include:
a. Local gross receipts taxes
b. State Corporation Commission special assessment
The "declining block" consumption tax should be limited to the state tax portion only. The local gross receipts and S.C.C. special regulatory tax should be considered as separate items.
4. Describe the appropriate tax treatment for:
Investor-owned utilities
Investor owned utilities should pay a corporate income on all income. They should also continue to pay the special regulatory tax on gross receipts.
Electric cooperatives
Electric Cooperatives should pay a corporate income tax if they are liable under current statutes. They should also continue to pay the special regulatory tax on gross receipts.
Municipal electric systems
Municipal Electric Systems should be subject to the consumption
tax.
Wholesale power procedures should be liable for the income tax
and special
regulatory tax on gross receipts.
5. Which state agency should administer any tax program designed to replace the current gross receipts tax?
If the "declining block" consumption tax is passed as currently written the SCC should administer the program. However, if the "declining block consumption tax is limited only to general fund taxes, the Department of Taxation should administer that program.
6. What action should the General Assembly take to protect/preserve the current revenues received from real property taxes on generation facilities?
The General Assembly should provide for central assessment of all property to investor owned utilities, electric cooperatives and wholesale generators.
7. Who should perform assessments on property owned by suppliers of electricity?
The S.C.C. should be designated as the Central State Agency to assess the property of investor owned utilities, electric cooperatives and wholesale generators.
8. What assessment method should be used on property owned by suppliers of electricity?
The current methodology of original cost less depreciation has been very effective and should be continued. However, as deregulation and competition takes place other appraisal techniques may be required. Comparable sales data and income may provide additional information.
9. What action should the General Assembly take to protect/preserve the current revenues received from the consumer utility tax?
No comment
10. Who should collect and remit the consumer utility tax to localities?
The local electric distribution company should collect and remit monthly the tax to localities in the same manner as is currently being done.