BPOL tax; localities to decide to impose on business gross receipts or State taxable income. (HB1437)

Introduced By

Del. Mark Cole (R-Fredericksburg)


Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law


Business, professional and occupational license tax; gross receipts or Virginia taxable income.  Allows localities to decide whether to impose the BPOL tax on a business's gross receipts or its Virginia taxable income.

  Read the Bill »


Bill Has Passed


11/08/2010Prefiled and ordered printed; offered 01/12/11 11100638D
11/08/2010Referred to Committee on Finance
01/14/2011Impact statement from TAX (HB1437)
01/17/2011Assigned Finance sub: #1
01/19/2011Subcommittee recommends reporting (8-Y 1-N)
01/24/2011Reported from Finance (20-Y 2-N) (see vote tally)
01/25/2011Read first time
01/26/2011Read second time and engrossed
01/27/2011Read third time and passed House (94-Y 5-N)
01/27/2011VOTE: PASSAGE (94-Y 5-N) (see vote tally)
01/28/2011Constitutional reading dispensed
01/28/2011Referred to Committee on Finance
02/07/2011Impact statement from TAX (HB1437)
02/09/2011Reported from Finance (13-Y 0-N) (see vote tally)
02/10/2011Constitutional reading dispensed (40-Y 0-N) (see vote tally)
02/11/2011Motion to recommit to committee agreed to
02/11/2011Recommitted to Finance
02/15/2011Reported from Finance with amendments (14-Y 1-N) (see vote tally)
02/16/2011Amendments by Senator agreed to
02/16/2011Read third time
02/16/2011Reading of amendments waived
02/16/2011Committee amendments agreed to
02/16/2011Engrossed by Senate as amended
02/16/2011Passed Senate with amendments (38-Y 2-N) (see vote tally)
02/17/2011Placed on Calendar
02/18/2011Senate amendments agreed to by House (93-Y 1-N)
02/18/2011VOTE: ADOPTION (93-Y 1-N) (see vote tally)
02/24/2011Bill text as passed House and Senate (HB1437ER)
02/24/2011Signed by Speaker
02/24/2011Signed by President
02/26/2011Signed by President
03/02/2011Impact statement from TAX (HB1437ER)
03/26/2011G Approved by Governor-Chapter 685 (effective 7/1/11)
03/26/2011G Acts of Assembly Chapter text (CHAP0685)


This bill was discussed on the floor of the General Assembly. Below is all of the video that we have of that discussion, 2 clips in all, totaling 2 minutes.


cindi writes:

Tax the gross proceeds of a business? Are you kidding me? Please do not support this bill, I thought the Republicans wanted to help business?

Mike Watson writes:

What a great way to convince a business to move elsewhere.
This should be renamed to the get out of my town bill.

robert legge writes:

Plenty of localities already have a BPOL that taxes gross receipts. It takes the place of a merchants capital tax. The key element is the proposed option of taxing income....which will never pass judicial muster.

Mike Watson writes:

The BPOL – Gross Proceeds tax should be eliminated as an option altogether. It is a tax that will discourage new businesses, most of which make no profit in their first few years, from coming to Virginia. It is particularly punitive to companies that sell high-end goods or services. So, this new start up decides not to set up shop in your county, as you’ll tax it based on revenue regardless of its operating expense and ultimate profit or lack thereof. Then, when this business becomes profitable, another county will reap the rewards in taxes and employment. If a business knows that any county can switch over to a BPOL tax system at anytime, this is a good reason to avoid Virginia altogether. I’m disappointed that a Republican would support it, much less be its Patron.

robert legge writes:

The horse has already left the barn Mike. 64% of VA localities already have a BPOL as of 2007- Weldon Cooper Center. BPOLs accounted for 6% of rev for cities and 4% for counties. ALL the rest have a merchants capital tax (You can't have both.

I was on a committee that looked at this for the local govt. It was clear that some businesses are hit harder than others by the merchants capital tax. Law firms, real estate, and financial services business that have little in the way of equipment and inventory compared to many other businesses didn't pay much merc. cap tax. We ended up not supporting a BPOL but primarily because it wouldn't generate as much money as what we were currently making from merchants capital tax but that as more businesses go online that might change in the future.

Ken writes:

If passed, this would set localities against each other in competition for the businesses. The losers will be ordinary citizens, who will have to pay more in real estate and/or personal property taxes to make up the resulting budget gaps.

robert legge writes:

I don't think you understand this bill very well, Ken. Localities have always been in competition with each other trying to attract other businesses. This will make little difference. If enacted (and approved by the courts) it will bring in tax revenues that would tend to reduce PP taxes.

I just dont' think it will happen because the state doesn't allow localities to tax income. It was the big tradeoff of 1927, that gave the state income taxes and the localities property taxes.

Mike Watson writes:

Gentlemen, as I watch the conversation, everyone seems to be missing the big picture. I can tell you as a business owner, this tax drives away business; especially small business and start ups...remember, as a small business owner, I'm a local resident also. Under this tax, a brand new start up company that makes no profit (as most don't in their first few years) can pay more tax than an established profitable company. Companies that sell higher dollar goods and services, even if their profit margin is considerably lower, will pay more taxes than very profitable companies selling lower dollar goods. While meant only as an example, the Ugo dealer might come to your county, but the Lexus dealer is going to go to a county that does not have the BPOL tax. This is not a tax that is applied fairly. And, when that business decides to go to another county, it will take the jobs, property tax, and residual revenue with it. I am talking from a voice of experience; this is exactly my situation. It is more cost effective for me to expand my business in another county that doesn't have BPOL. This tax needs to be eliminated and replaced with a simple fixed business license tax. This is not just competition from county to county, it is State to State. I have a multi-state company. Even though my income tax is higher in NC, my overall taxes are lower because of BPOL. If I expand, I'm better off expanding there. It's not what I want....it's simple math.

robert legge writes:

Must be nice to be the only one perceptive enough to see the big picture. The issue is not about whether a BPOL is bad. It is about localities having the option of having the tax applied to net or gross. Some probably cite net as a more equitable way to tax. Whether its merchants capital, bpol gross, or bpol net, none attract business, but one things for sure, any plan will hurt some businesses more than others.

Ken writes:

You might be surprised by how well I understand this tax, Robert. At this time, the localtiies that levy a BPOL tax do so uniformly on gross receipts.

robert legge writes:

It's already well established that it's only on gross receipts. The issue is whether localities should have the option of taxing net income.

Mike Watson writes:

You folks never fail me. I did not suggest that you were not perceptive enough to see the big picture, only that you were not looking. You've indicated that your primary concern is the revenue generated from the tax itself. You fail to consider the revenue that would be generated by additional employees, vehicles and other property taxes, residual income through commerce with surrounding businesses, etc. All these revenue sources will go elsewhere when a business decides that it can earn more by starting or expanding in a location that does not have BPOL. As a result, you’ll have higher personal property taxes and less employment in your community. The primary driver of entrepreneurship is profit; the owner must be confident that the monetary rewards are worthy of the risk and effort. It is a nice feeling to employ good people, contribute to the community and provide a valuable good or service. But no one ever quit a good paying job just so they could employ someone else. Try it, you'll understand. There is a practical balance between a community being an attractive business location and the business contributing to the community. BPOL represents only the shortsighted concerns of one side. Virginia should be evaluating all aspects of attracting business; they will build somewhere, let’s see what we can do to bring them here. OK, we’ve beaten this horse silly. It appears that some gains will be made in this session to chip away at BPOL. Rest assured that future legislation will be introduced to eliminate it completely. Thanks for your feedback. You may now proceed with the obligatory parting insult.

robert legge writes:

Mike writes: "It appears that some gains will be made in this session to chip away at BPOL."

The only other BPOL bill that would have restricted increasing BPOL rates was killed. If the BPOL was so bad why does almost 2/3 of all jurisdictions have it. I believe all the rest have a merchants capital tax instead.

But once more, this time with feeling, the issue is not whether BPOLs should be abolished. It's whether localities should be able to tax net or gross.

Should localities be able to tax net income or should it stay at gross?

Mike Watson writes:

You're right that abolishment is not at issue today. But it is ultimately the real issue. But you did just ask the right question regarding net or gross. My answer is neither. I'm fine with a business paying a fair business license fee. And, if you can find a way to make tiers relative to the level of public services utilized, better yet - although there needs to be a cap. I do not believe that we should have a state income tax at all; not for the benefit of state or localities. If a business comes to the state, employs our citizens, pays sales, property and other taxes, and contributes to the good of the community, I do not believe it should be penalized with a punitive income tax and certainly not a gross proceeds tax. I also believe that the personal income tax should be eliminated and replaced with increased sales tax. I know that was painful for you to hear.