McDonnell pushes to end budget ‘gimmick’

December 11, 2012

Virginia Gov. Robert F. McDonnell is stepping up efforts to eliminate what he calls a budgeting “gimmick” that has forced Virginia merchants to remit sales taxes early.

McDonnell (R) said Tuesday that he will propose eliminating the “accelerated sales tax” for half of the businesses paying it by fiscal 2014. He will include that plan among the budget amendments he presents to the General Assembly’s money committees on Monday.

McDonnell will include $20.8 million in the budget to speed up elimination of what his announcement called a “budget balancing gimmick.”

“I have always opposed the policy of playing budget games with sales tax receipts,” McDonnell said in a statement. “The accelerated sales tax penalizes Virginia retailers and merchants and skews states revenues.”

In the midst of the recession, starting in June 2010, the General Assembly started requiring certain merchants to pre-pay a portion of their July sales tax remittance in June. The policy applied to merchants with $1 million or more in taxable sales or purchases.

Since then, McDonnell has pushed the General Assembly to eliminate the accelerated sales tax. Legislators have twice raised the threshold, from $1 million in sales or purchases to $5.4 million, and then to $26 million. McDonnell now proposes raising the threshold to $48.5 million.

“We need to get this anti-business policy off our books as soon as possible and I hope the General Assembly will support this budget proposal,” he said.

Jodi Roth, of the Virginia Retail Merchants Association, praised the move.

“We applaud the governor for his commitment to raise the threshold on AST thereby reducing the number of retailers impacted by this burden,” she said.

Laura Vozzella covers Virginia politics for The Washington Post.
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