Governor proposes to limit, but not yet end, accelerated sales tax

By Norman Leahy | Friday, December 16th, 2011 | Policy, Virginia

A press release from the Governor’s office lands in my inbox. It’s titled “Governor’s Budget Will Rapidly Speed up Elimination of Unfair Sales Tax Policy for Retailers.” Intrigued that one of the most egregious sleights-of-hand the political class used to balance the state’s books in 2010 might be on its deathbed, I read on to discover that, indeed, most, but not all, businesses will benefit:

…by the end of Fiscal Year 2012 95.6% of affected sales tax dealers will no longer have to make accelerated payments to the state. The Governor will include $50 million to facilitate this policy change. The Governor had earlier sought to begin unwinding the accelerated sales tax beginning in FY2013. With today’s action, the governor has sped up the process substantially.

That’s good news. Extorting 13 months worth of sales tax payments from retailers each calendar year was a nasty habit the General Assembly swore-off, via legislation, a few years ago. But when the state’s finances turned sour after the housing bubble burst, the worthies went back to their old habits with embarrassing speed.

That’s why I found the Governor’s statement about all this rather odd:

“I have always opposed the policy of playing budget games with sales tax receipts. The accelerated sales tax can feel to retailers like a ‘double tax.’ It penalizes Virginia retailers and merchants and skews states revenues. It is bad policy and it needs to be eliminated as quickly as we can. Last year, in the middle of the General Assembly session, I recommended significant relief for thousands of dealers from the accelerated sales tax. Now, when the General Assembly acts on this proposal, we can continue that progress and remove 95.6% of all initially impacted retailers from this policy by next June. We need to get this anti-business policy off our books and I hope the General Assembly will agree with me and support this budget proposal.”

He’s right that it is an “anti-business policy.” And it enjoyed bipartisan support. But eliminating it is not a gift to retailers. Rather, it is simply returning matters to where they stood before 2010.

That this state-mandated thievery occurred at all would have made the Artful Dodger blush.

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