The Prince William Board of Supervisors is considering requiring a business license tax that would affect the gross receipts of virtually every type of business in the county.
The proposed new tax structure would replace the present capital business tax, which taxes only those businesses with inventories such as car dealerships or clothing or furniture stores, and would include doctors, lawyers and other private businesses. The board will decide Nov. 20 whether to send the proposal to public hearing.
Two decades ago, the state legislature revised state law to allow jurisdictions to implement the license tax. All Northern Virginia jurisdictions have adopted it except Prince William, Stafford and Fauquier counties.
Some county officials believe the tax was never seriously considered for fear it would keep some businesses and professional people from locating in the county. Early this year, believing that the business community in the county would be more likely to accept the change because of the county's healthy growth pattern, the supervisors asked the staff to prepare a report comparing the two tax structures.
According to Gainesville Supervisor Anthony Guiffre, who will support sending the new tax proposal to public hearing, three board members are already in favor of a public hearing. The seven-member board requires four votes for approval.
Said Guiffre: "One board member needs a little persuading, but I think we can do it."
In a preliminary report in September, the staff told the board that projected estimates of revenues from the current tax structure would bring $530,000 into county coffers in 1984.
The proposed business license tax, based on the tax rates used by Fairfax County, could bring in as much as $2.8 million annually. Fairfax County collected $12 million in 1982, the report said. Loudoun County, which also uses the business license tax, received $451,000 in 1982.
Under the proposed new tax, anyone wishing to do business in the county would be required to buy a license and pay a tax based on their gross receipts. Business and professions would be broken down into six categories with each category taxed at a rate set by the board.
The categories and the maximum rates per $100 set by state law and rates paid in Fairfax County are: Contractors and construction, 16 cents; Fairfax, 5 cents. Retail sales, 20 cents; Fairfax, 17 cents. Financial real estate and professional services, 58 cents; Fairfax, 16 cents. Repair, personal and business services, 36 cents; Fairfax, 22 cents. Wholesalers, 5 cents; Fairfax, 4 cents. Public utilities, 50 cents; Fairfax, 26 cents.
Businesses that have had a good year but often have depleted inventories by Jan. 1 because of Christmas sales may end up paying more under the new structure, while businesses that end the year with large inventories, such as car dealerships, could pay less, the report said.
Guiffre, an accountant with a private firm in Manassas, said he is garnering support for public hearings on the issue because "if you can call a tax fair, this is fair."
It may be a little more "burdensome" for the county to administer because of the increased paperwork, he said, but "the profit margin would be so much higher that the proceeds would more than offset the cost."
Coles Supervisor Richard Pfitzner said he will not support the tax change. An attorney, Pfitzner said he has "no problem" with the county's goal of raising funds, but objects to "forcing professionals to disclose their gross income."
Said Pfitzner: "It intrudes on the confidentiality of professions in competition with each other."
Pfitzner also said he was concerned that the new tax structure would force some people to move to a county that does not tax gross receipts. "That's why a lot of them came here in the first place," he said.
Manassas and Manassas Park, which use the business license gross receipts tax structure, have lost several businesses to the county over the years, he said.
Brentsville Supervisor Joseph Reading said he is waiting until he sees the staff report before he decides how he'll vote. The owner of a lumber business who pays what he calls a "hefty inventory tax," Reading said his vote will be based on the fairness of the tax proposal.
"It would catch an awful lot of professional people who aren't paying anything," Reading said.
"I also know of cases where businesses transferred most of their inventory to an outlet in another jurisdiction before Jan. 1 to avoid paying the current tax. That's unethical, to say the least," said Reading. "And I know it's happening."