Albemarle New Tax Targets Small Businesses

By. Neil Williamson, President

An open letter to the Albemarle County Board of Supervisors

Dear Supervisors,

Thanks to restrictive land use decisions and other cost factors, many of the small businesses that service Albemarle County are located outside of the county limits. These enterprises are important players in our regional economy and, perhaps unknowingly, via your agenda item #23 you are about to stick it to them by requiring increased accounting and a new local tax all for a gain of just over $10,000 a year in revenue.

Please let me explain.

Currently any business located outside of Albemarle County with Albemarle gross receipts greater than $100,000 has to report that income and pay Business and Professional Occupational License (BPOL) Tax to Albemarle. The proposed ordinance drops the gross receipts threshold to $25,000.

Sec. 8-603 Contractors, developers, electricians, plumbers, steamfitters and speculative builders.

Each person engaged as a contractor, developer, electrician, plumber, steamfitter or speculative builder shall be subject to a license tax, and other provisions, as set forth herein:

A. Each contractor, developer, electrician, plumber, steamfitter or speculative builder contractor speculative builder or developer shall be subject to a license tax of sixteen cents ($0.16) for each one hundred dollars ($100.00) of gross receipts from the business conducted during the preceding fiscal or calendar year.

B. Each person engaged in the business of a contractor shall include in his gross receipts all work done, whether such work is done by contract, subcontract, day labor or time and material.

C. Each contractor who has paid a local license tax to another locality in which his principal office or branch office is located shall be exempt from obtaining a license and from paying a license tax to this county for conducting any such business within this county unless the amount of business done by any such person in this county is equal to or greater than one hundred thousand dollars ($100,000.00) twenty-five thousand dollars ($25,000.00). The amount of business done in the other locality in which the license tax is paid may be deducted by the person from the gross receipts reported to this county.

Nothing being proposed is illegal but just because you can does not mean you should.

Beyond the problematic issue of double taxation (will the entity continue to pay for ALL their gross receipts in their home locality), the Free Enterprise Forum is concerned about fairness to small business.

Consider the small family owned HVAC repair company located in Greene County. They do the majority of their work in Greene but from time to time they do work in Albemarle. Because this ordinance is based on gross receipts all of the pass through costs are included, if HVAC install is between $5,000 and $15,000 this company could only take on less than 5 such jobs a year or it has to file for business taxes in Albemarle.

The choice is for the small business to either not offer service to Albemarle or to increase its accounting costs and tax payment planning. Any increase in pricing will be passed along directly to the end user.

And what is the anticipated benefit to Albemarle?

From Albemarle Finance Director Betty Burrell’s staff report:

•  Sec. 8-603(C) – License Tax — threshold for out-of-County contractors – projected $10,250 revenue gain per year. Staff does not anticipate a significant budgetary impact from the other proposed revisions. [Emphasis added nw]

I understand state law has changed that will allow you to do this.

The Free Enterprise Forum believes this lower threshold will inadvertently increase administrative cost for already financially strapped small contractors and in the end harm Albemarle citizens with increased costs, reduced services or both.

Please retain the $100,000 threshold.  Thank you for your service to the community.

Respectfully Submitted,

Neil Williamson

Neil Williamson December 2 2015 Albemarle BOS meeting Photo Credit Charlottesville TomorrowNeil Williamson is the President of The Free Enterprise Forum, a privately funded public policy organization covering the City of Charlottesville as well as Albemarle, Greene, Fluvanna, Louisa and  Nelson County.

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