Sweet 16 (Tax Bills) Will Cost Virginians Billions

By Steve Haner

What will this year’s General Assembly cost you in taxes? Here are at least 16 bills approved by the 2020 General Assembly that create or raise taxes on Virginians or authorize a local government to do so. No one told Virginians at the start of session that major tax increases were coming, and there is little recognition of what has now happened. It is time to tally the bill.

If anybody would or could run the fiscal projections on these 16 tax bills, they might combine into a major tax hike comparable to those in 2004 and 2013. Over several years this will cost families or businesses billions of dollars, but most will be collected by wholesalers (cigarettes and fuel) or too deeply buried on receipts to see.  Assessments on business eventually get passed down to the customer: you. 

This is a slightly longer list than the one reported about three weeks ago, and if somebody has other bills to mention, send them on. This list was also just distributed by the Thomas Jefferson Institute for Public Policy.

Bills of Statewide Impact (where companion bills passed, only one is linked):

1) The Budget Bill includes an increase in the state tax on cigarettes and other tobacco products, and creates a new tax on nicotine vaping products. The initial revenue estimate was $119 million in fiscal year 2021 and $130 million in fiscal year 2022.

2)  House Bill 1414 raises the statewide tax on gasoline by five cents per gallon on July 1 of this year and then against July 1, 2021. The bill also imposes an additional 7.6 cents per gallon to be collected in all the state’s localities not otherwise covered by a regional transportation tax  The tax on gasoline for your car rises from just above 16 cents to just under 34 cents per gallon in 16 months. An additional grantors tax on Northern Virginia real estate transactions is also created, to be used in that region. No revenue total for 1414 is provided, but it is likely $300 million or more next year, and close to $400 million the following year.  A Senate presentation estimates “almost $800 million” over the two years.

Local Taxing Authority

3) House Bill 785 grants to all counties the ability to collect four taxes previously allowed to cities but denied to most counties. If all exercise the options allowed, Virginians in them could be paying an additional $500 million by 2022. Most of that would come from taxes on restaurant meals and prepared foods, now allowed only after a referendum (often rejected). Most of that would come if Fairfax County imposed that tax, rejected by its voters in 2016.

4) House Bill 534 allows any Virginia locality to impose a 5-cent tax on plastic bags at retailers, on a local option basis. In response to a question on the floor, the patron said if a retail uses two bags to make sure items are secure, that will cost a dime.

 Taxes Hidden on Your Electricity Bill

5) Senate Bill 851, the clean energy omnibus, imposes the state’s first carbon tax on electric power generation, collecting perhaps $150 million or more in 2021. By 2021 your electric bill will also include a tax to fund a new low-income benefit program, capping electric bills for public assistance recipients, called the Percentage of Income Payment Plan. That is likely to be another $200-250 million per year, only for customers of the two largest providers.

 Business Taxes

6) House Bill 4 authorizes five casinos in Virginia, if approved by local referendum, and sets the tax rates on their gross receipts at from 18 to 30%, depending on their income. Revenue will be shared with the host localities.

7 )Senate Bill 735 creates a new regulatory structure and tax for the peer-to-peer vehicle sharing business, a growing Internet-based alternative to traditional auto rentals (already taxed).

8)  House Bill 1428 creates a new state health benefits exchange and funds its operation with an assessment on health insurers, similar to the hospital provider assessments previously used to fund the 2018 Medicaid expansion. The assessment is expected to collect about $3 million next year but more than $50 million annually once the exchange is fully operational.

9) House Bill 1145 imposes an increase in the state’s small litter tax on retailers and the beverage industry.

10) House Bill 129 increases the gross receipts taxes paid by public service companies to fund the State Corporation Commission’s operations. No revenue estimate was provided.

 Regional Transportation District Taxes

11) House Bill 1541 creates a new Central Virginia Transportation District in the Richmond region, copying similar special taxing regions for Hampton Roads and Northern Virginia. Richmond area residents and businesses will pay an additional 0.7% on the sales and use tax and the 7.6 cent regional fuel tax.  The taxes will raise $179 million next year and $198 million the following year.

12) House Bill 1726 creates a regional transient occupancy tax and grantors tax on deeds in the Hampton Roads Region to provide an additional $25 million per year for mass transit operations.

The final four (13-16) are local sales tax increases dedicated to school construction. House Bill 200, House Bill 486, House Bill 1631 and Senate Bill 224 allow a total of nine localities to add another 1% on their sales and use taxes dedicated to local school construction. This is a pattern likely to spread to other localities in future sessions unless some other school constructing funding sources are identified.

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37 responses to “Sweet 16 (Tax Bills) Will Cost Virginians Billions

  1. following………

  2. The really amazing thing is that this welter of tax increases comes at a time of rapidly increasing tax revenue from economic growth. I can hardly wait to see what the new crowed in the General Assembly does when the economy dips into recession and revenues actually decline.

    At least we’ll have a bigger Rainy Day fund!

    • You mean, what they do when the recession we are now in is recognized…..well, it may be only one quarter. It takes two quarters to officially be a recession.

    • Translated:

      TRUMP GIVETH
      PROGRESSIVES TAKETH
      MIDDLE CLASS SHRINKETH
      CRONY CLASS ENGORGE.

    • johnrandolphofroanoke

      If I remember right, Doug Wilder was dealt a similar hand of cards and it didn’t end well for Virginia.

    • Most of these tax increases do not produce additional money for the general fund, which is what benefits from economic growth. Seven of them give localities the authority to raise taxes. Localities depend on the real property tax. Property taxes do increase with economic growth, but personal wealth does not always increase with the growth in property value. Therefore, localities do not have the same access to general economic growth that the state does.

      Three of the tax increases are transportation-related. The general fund does not support transportation.

      One tax increases revenue for the State Corporation Commission, which is not supported by the general fund.

      One tax is what used to be called a “sin tax”. None of that tax is passed on to the general public. It is a tax on revenues and the only ones affected are those that choose to participate in casino activities.

      The purpose of another tax, SB 735–vehicle sharing, probably is not to raise revenue, but to level the economic playing field for the rental car business.

      • The usual sophistry, intended to keep the sheep lined up for shearing. No where else will you see the list together, and only with the list together is the impact obvious.

        • I really appreciate your compiling the list. In my comment, I was really responding to Jim’s implication that all the revenue generated by these new taxes or authorizations would flow to the general fund which is experiencing healthy growth due to the economy. In other words, not all taxes are alike.

          • Yes, my response was off base….sorry. Agreed most are NGF, which is no accident.

  3. Steve,

    Check your grantor’s tax numbers for NoVA. I believe it is about one-tenth the amount you listed.

  4. So they hit us with the gas tax but did not do away with the annual state vehicle inspection requirements?

    I guess they CAN have their cake and eat it too.

  5. New problem…economy in apparent Corona/Oil shambles
    The only thing might make sense is 2 x gaso tax increase since pump price is going down.

  6. One of the problems that is not going to be easy to address is people who have to be at work, can’t work from home, and don’t have health insurance or sick leave.

    They’re not going to stay home even if they’re sick.

    cutting FICA might help them – actually might encourage them to continue to work if they going to get more wages.

    On the other hand, a LOT of service jobs are where there are lots of people – restaurants, child care, nursing homes, grocery, doctor offices, etc.

  7. So our overlords in Richmond expect us to pay Morton’s Steakhouse prices for dog food?

    I have no faith that they will do anything more with this additional revenue than to piss it away, lining the pockets of corrupt bureaucrats and politically connected businessmen.

    • The meals tax is a local tax. The “overlords” only authorized counties to levy it. Those people on this blog who chafe at the degree of control that the state has over localities now have reason to be glad that some control has been lifted. The revenue stays with localities and, hopefully, will mitigate any need to increase the property tax. If you don’t want to pay “Morton’s Steakhouse prices” (a five percent meals tax will hardly be that drastic), then talk to your board of supervisors.

      • Exactly. A good number of these “terrible” govt taxes , basically turn over that decision to the localities AND if they do approve, the tax money stays with them and does not go to Richmond!

        But you’d never hear TJ and the anti-tax boo birds admit it!

      • That was a metaphor. The “Morton’s Steakhouse prices” are the increased taxes across the board. The “dogfood” is the mediocrity of which Virginia is so proud.

        Sorry that it went completely over your head….

        I’ll put it another way so it should be clear. I do not want to pay “northern state” taxes for “southern state” results.

  8. ” Northam proposes doubling the state’s cigarette tax to 60 cents a pack, which his administration estimates would bring in about $100 million a year in new revenue. Taxes on other tobacco products, like vape cartridges, would also double, from 10 percent of the manufacturer’s price to 20 percent, bringing in roughly $20 million a year in new revenue.

    The budget proposes rolling that new money into an initiative to push down marketplace health insurance premiums 20 percent. (The reinsurance program, a tool employed in other states, delivers state money to private insurers to help subsidize the cost of health care for their most expensive customers.)

    Northam’s administration reasons that smoking is a major driver of health care costs, so it only makes sense to link the two issues.

    Northam’s budget would also create a state-based health insurance marketplace, but that initiative would be covered by fees assessed on health care providers.”

    sounds like there is a plan.

    If they really use the money the way they say they will – it ought to reduce other state expenditures for MedicAid by putting smokers in touch with Doctors who can then help them reduce or quite smoking.

    Much better than those Dominion School Buses – pure crony capitalism and rent seeking… bad bad bad!!

    😉

    • The taxes passed, but not the reinsurance plan. Sorry.

      • Shoot… they needed that to make health insurance more affordable.

        do we know where its going to be spent?

        • Money being fungible, look at the budget and take your pick.

        • The budget bill did not link the reinsurance plan with the increase in tobacco taxes. That is, it did not specify that the revenues from the tobacco tax should be dedicated to the reinsurance plan. Those revenues were to be deposited into the general fund. The source of funding for the reinsurance plan was the general fund. If the legislators had decided to eliminate the increase in the tobacco tax, that action would not have necessarily affected the reinsurance proposal. As it happened, the elimination of the reinsurance plan freed up $73 million per year in the general fund to be used for other purposed. (I love that word “fungible”.)

          • which is a shame because it’s the reinsurance that helps to keep premiums lower and it was the removal of the reinsurance at the Federal level that resulted in premium increases and loss of insurers altogether at the Federal Level. Some states decided that they would reinstitute it at the state level – basically to help attract more insurers and keep premiums lower.

            Getting rid of reinsurance actually increases the amount of subsidies that the govt provides which will be the state if the State decides to operate the exchange which Virginia is going to do, I think.

  9. Eventually Larry I guess we should just turn over all our money to the government so it can save us from having to spend anything. Wait. That actually IS socialism…..

    This has been a fun debate. Note, if not us here at this blog, who would be trying to add all this up and compile this list? The Chambers of Commerce? Don’t make me laugh. MSM? Maybe when they had resources. The Loyal Opposition legislators? Too many of them voted for too many of the bills. It was kind of a quick and dirty effort on my part, and I may update it when the revenue estimates are clearer. The RGGI carbon tax was one of those mentioned 18 months about when I proclaimed “Taxaginia” but a bunch of these are entirely new ways to separate “from the mouth of labor the bread which it has earned.”

  10. Actually – start with a compliment. You do an EXCELLENT job of providing information-laden articles and I cannot thank you enough for that and you add insight which is enormously useful also but then you also add opinion and especially from a TJ, conservative point of view which is also good and also worthy of comment!

    Especially when you toss around such favorite righty phrases like “socialism” and “taking our money”, etc.

    To be honest, things like public roads, public education and public health care , ARE socialism but it’s also what most voters want and that’s the essence of our model of government – elections get decided on these issues and it’s clear that the no-tax folks lose big when they stake their positions on taxes to pay for these things.

    I thought and still do that a reasonable compromise is to allow people in the localities to decide how much local govt stuff they want to pay for – or not. Not a new concept. Been in place for cities and towns for a while and for taxes like meal taxes and such for a while so why not expand that OPTION for localities as opposed to raising taxes for the State then distributing it by formula in which there are always complainers that they didn’t get their share – cue DJ and TMT and others.

    So the idea of local option to tax and choices as to what to tax beyond income and property and how much to tax – and accountability at the local level for those decisions – has a much better feel to it than Richmond “taking our money and not giving it back”.

    I know. I know. All of this amounts to suggesting that you once more, “assume the position”. You just got that TJ blood in you!

    • Thanks. Had VPAP not done in Jim and me, with their bullshit bias, I’d be writing those stories as straight as an arrow. And that one is fairly straight (“socialism” was in a comment.) There have been several times this year when I broke something to be ignored by VPAP, and Virginia Mercury did the same story with its bias a bit later and got re-distributed. That’s crap. Clean Energy bill stuff for example.

      If asked, even wearing my “TJ” hat, I’d say the transportation tax increases are fully justified, and I’ve been arguing for greater reliance on the fuel taxes on this blog for two decades. That 2004 tax increase I mentioned? I played a role in getting it passed – feel free to ask Mark Warner. I just don’t like this stuff remaining in the dark.

  11. In my mind much of what the Democratic majority drove the General Assembly to do this session was positive. Decriminalizing possession of small amounts of marijuana, moving regulation of menhaden to the right authority, the redistricting commission, legalizing casino gambling (with local agreement), even raising the cigarette tax. They missed some biggies like making political contributions from regulated entities illegal. However, the big flaw is the Democrats’ unending desire to tax and spend. This is exacerbated by their willingness to hide their actions behind a smokescreen of taxation through regulation.

    I applaud Steve for holding the General Assembly accountable for their actions. No other news or opinion outlet in Virginia is doing this. Most news outlets / blogs lack the expertise that Steve possesses and couldn’t compile the list he published in this article. Others have the expertise but are complicit in the coverup of what’s happening in Richmond for partisan reasons.

    Going into this session Virginia was a mid-level taxation state. Coming out, not so much. As a thought experiment … how are the high tax states faring in America? Illinois? New York? A couple more GA sessions like this one and we’ll find out for ourselves.

    • As I’ve stated elsewhere…Virginia is tolerable only because of it’s low taxes. Absent that, and you might as well move somewhere else where 200+ years of “Plantation Elite” policy has NOT left it’s indelible mark on everything.

      • quite a few “low tax” states.. and most of them are inferior to Virginia in my mind. Virginia is classic tax purgatory. You’ll probably hate most of the states that have better economies than Virginia!

        • Well, rest assured I won’t be leaving Virginia for a low-tax state like Mississippi or Louisiana.

          On the other hand—I expect results for my tax dollars. But what I fully expect to happen is that the taxes go up with no noticeable improvement in how things work. Politicians are very good at the magic trick of making millions of dollars disappear without a trace.

          • re: don’t see results.

            That’s often true and that’s why I like to see local option taxes.

            And I WOULD like to see a more diversified tax structure so that we don’t depend so much on real estate and personal property.

            No one I know likes taxes including me but they are necessary and almost always most of us think they spend more than they need to.

  12. This GA – C+ to B- – done some good things, done some not so good things, pretty much devolved taxes to local option, and left a bunch of stuff on the table.

    From a Conservative point of view – I’m sure it’s a D-

    AND I think from the far left – a D tending to C-

    what say others?

    And yes, I’ll compliment Steve in as many ways as I can to convince him to stay here in BR and regale us with his wisdom and knowledge even if it tend to be TJish at times.. and glad to hear he SUPPORTED the gas tax!

    Never did see his view on the state inspection issue. (or was asleep at the switch).

  13. Pingback: Taxaginia Reappears As Special Session Looms | Bacon's Rebellion

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