By this time, most business owners should be well aware of the citys proposed commercial add-on tax and have figured out how much it will hurt (cost) their bottom line. Weve been making the argument about how detrimental this tax is to the majority of our businesses in Alexandria small businesses that already pay more than their fair share of taxes and fees to run our city, while using a fraction of the services the city provides compared to residents.
The Alexandria City Council now has a proposal to provide relief in the form of reducing the onerous BPOL (Business, Professional and Occupational License) taxes as an offset to imposing the commercial add-on tax.
The proposal gives relief on a graduated scale to businesses with less than $750,000 in revenue. The smallest companies, those with gross revenue under $350,000, would pay only $50 under the new guidelines. Companies with revenues between $350,000 and $750,000 would see their bill cut in half. Sounds like a nice idea.
But there are several problems we see with this BPOL relief proposal.
The BPOL tax, taken alone has been a long-standing burden in its current form. Overall, we have the highest BPOL rates in Northern Virginia, particularly with the professional services license tax, which is exorbitant. The BPOL taxes need reform whether or not a commercial add-on tax is implemented, and therefore should also be considered as a separate issue.
Second, if the city is really proposing the BPOL relief as an offset to the CAT, the proposal on the table just doesnt go far enough. The amount of savings is quite minimal: a savings of $1.6 million against a total of $12 million in proposed added property tax. Much more savings need to be applied here to create a meaningful offset of the add-on tax. When you consider the increase in commercial real estate assessments and combine that with the 12.5-cent new tax, business owners are looking at an increase of up to 20 percent on their property taxes. Thats a sizable amount to absorb, especially all at once. The BPOL would need to be reduced by that percentage or more to be able to call it relief.
Finally, any relief program the city implements should be shared equally among all businesses. The current proposal discriminates against businesses with revenue over $750,000, which would receive no reduction on their current BPOL tax. Why would we treat these companies differently? It appears that we are punishing companies for being successful. Since we all pay the tax equally, we should all receive equal benefit if a reduction or relief is implemented.
As it stands, the citys proposal to reduce the BPOL tax cannot be called relief. Rather, its a distraction from the pain being inflicted by the add-on tax. If our city cares about businesses (and I think it does), the government should present a proposal with a meaningful and significant reduction in BPOL tax that is not necessarily tied to the proposed add-on tax. That would stimulate commerce and send a message to the region that Alexandria is promoting an environment open for business.
The writer is president and CEO of the Alexandria