Businesses applaud curbs to BPOL tax

October 10, 2011

Small-business owners have myriad views on all kinds of issues. But when it comes to Virginia’s so-called “BPOL” tax, there seems to be across-the-board disdain.

“It’s a completely oppressive tax that needs to be removed immediately,” said Rebecca Barnes, president of Prince William Living magazine, which has a print circulation of about 10,000.

Barnes and others praised Manassas and Prince William County for moving forward with an initiative to make the tax slightly less onerous for small businesses and start-ups. But business owners say they hope both localities go even further.

Manassas businesses that take in less than $150,000 in “gross receipts” — total revenue — are no longer subject to the Business, Professional and Occupational License tax, which is assessed based on how much money a company takes in. Prince William businesses taking in less than $200,000 will similarly get an exemption under the proposal. The county is expected to formally adopt the change after a public hearing, which has not been scheduled.

Neither the city nor the county, however, is expected to roll back the tax completely.

The BPOL tax has long drawn ire from some members of the Virginia General Assembly who say the tax — apparently implemented to pay for the War of 1812 — is burdensome and unnecessary. And the business community especially dislikes it because BPOL does not account for actual income — meaning businesses still pay even in years when they do not make a profit.

Local governments, though, have come to rely on the revenue. BPOL taxes fed Manassas coffers to the tune of $2.7 million in fiscal 2011, said John P. Grzejka, the city’s commissioner of revenue. The tax provided $21 million for the county during the same period. The city will lose about $100,000 this fiscal year with its BPOL change. The county expects a loss of $400,000.

Barnes’s business is one of those that would not have to pay BPOL this year under the new proposal. But she worries about the tax’s effect on her business down the road.

“If small business is welcome in Prince William, let’s make that a reality,” Barnes said. “Get rid of the BPOL tax.”

Board of County Supervisors Chairman Corey A. Stewart (R-At Large) said the tax is “insidious [and] economically damaging.” But the county’s budget has been “cut to the bone,” he said, and getting rid of BPOL would mean a tax increase for homeowners that could compensate for lost revenue.

“We would have to increase property tax rates by 10 cents, and it would shift the burden from businesses to residents,” Stewart said. “That’s not something we think is fair.”

BPOL taxes especially hurt start-ups, said Brian Gordon, who sits on the Prince William Chamber of Commerce’s executive committee, which has advocated changing or eliminating the BPOL. He said he hopes the $200,000 threshold change encourages more start-ups in the county.

Stewart said there have long been rumblings from Richmond that BPOL could be replaced with a new revenue stream for localities.

He noted, however, that “the tax has been around since the War of 1812. I don’t expect any changes coming from Richmond anytime soon.”

Jeremy Borden covers Prince William County, Va., for The Washington Post.
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