Governor Kaine Proposes Legislation to Allow Property Tax Relief, Raise Tax Filing Threshold

Governor Kaine Proposes Legislation to Allow Property Tax Relief, Raise Tax Filing Threshold

- Also will ask Assembly to clarify BPOL tax issue, address idle machinery and tools tax -

RICHMOND - Governor Timothy M. Kaine announced today that he will ask the 2007 General Assembly to adopt significant tax cuts for Virginia's working families, including a proposed constitutional amendment allowing local property tax relief for homeowners, as well as pro-business tax legislation. In addition, the Governor has proposed raising the state income tax filing threshold in a move that would provide meaningful tax relief to more than 300,000 lower-income Virginians.

"These efforts build on our bipartisan work with the 2006 General Assembly to eliminate the estate tax, create a sales tax holiday on back-to-school supplies, and legislation that gives citizens more information about their annual property tax bills," said Governor Kaine.
Homestead Exemption

The Governor's homeowner tax relief plan calls for a state constitutional amendment to allow local governments to exempt as much as 20 percent of a home's value from real estate taxes. The amendment's total financial reduction on property tax bills for families cannot be calculated until local governments decide on the amount of the exemption, and who will be eligible for it. The legislation will be sponsored by Senator Mary Margaret Whipple and Delegate Bob Brink.

"This homestead exemption is a significant way to address the frequently dramatic rise in property tax bills we've seen in recent years," Governor Kaine said. "We should give local governments this important option to reduce homeowner's taxes in a smart, strategic, and financially responsible way."
Income Tax Relief

Governor Kaine's budget amendments, submitted last month, also call for increasing the filing threshold for state income tax from $7,000 to $12,000 for an individual, and from $14,000 to $24,000 for a married couple. If endorsed by the legislature, the Governor's proposal would take effect January 1, 2008. This targeted tax relief would reduce state revenues by approximately $27 million a year.

"With this change, we can eliminate income tax liability for 147,000 of our citizens," Governor Kaine said. "This also helps another 176,000 people from having taxes deducted from their paychecks, only to file a tax return at year's end in order to receive a complete refund."

The Governor's income tax relief proposals will be sponsored by Senator Walter Stosch and Delegate Ken Melvin.
Clarifying BPOL Tax Issue

Governor Kaine also announced today that he will work for passage of legislation making it clear that the General Assembly did not intend to subject motor fuels tax payments to the locally-assessed business, professional, and occupational license (BPOL) tax when lawmakers changed how motor fuels taxes are paid in 2001.

"The law was designed to streamline fuel tax collections by collecting the money from oil refiners rather than from individual gas stations and convenience stores," said Michael O'Connor, president of the Virginia Petroleum, Convenience and Grocery Association. "We appreciate the Governor's efforts to clarify an issue that could help Virginia consumers as well as hundreds of small, independent retailers and marketers."

The BPOL legislation will be sponsored by Delegate Bob Purkey and Senator John Watkins.
Machinery & Tools Tax

Governor Kaine will propose legislation to set a clear standard in law to determine when machinery and tools are deemed idle and not subject to local taxation. In addition, the bill will require localities to consider taxpayer submissions of authentic, independent appraisals when valuing such property. The bill would also require that businesses give localities advance notice of their intent to idle equipment. The Governor's proposal follows a series of discussions with local government officials, business groups, and other stakeholders, to produce a mediated solution. The machinery and tools tax legislation will be sponsored by Senator Frank Wagner and Delegate Chris Saxman. Delegate Bob Purkey also has filed legislation on this issue.

http://www.governor.virginia.gov/MediaRelations/NewsReleases/viewRelease.cfm?id=321