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Council considers revamping BPOL



Fredericksburg officials discussed in a work session Tuesday ways to change some of the city’s business taxes.

Businesses are charged a business,  professional and occupational license (BPOL) tax based on how much total revenue they bring in. 

To make the city more business-friendly compared with  neighboring counties, city officials have discussed getting rid of it—as Stafford County did—or reducing it—as Spotsylvania County did.

  The city brings in $5.3 million in revenue from the tax each year, and if it went away, the revenue stream would need to be replaced.

It’s one of the five largest revenue sources for the city.

City  Manager Beverly Cameron told the council that the BPOL tax brings in 7 percent of the city’s general fund.

City staff proposed seven options of ways to modify the current BPOL tax structure, but focused mainly on two.

In the first, businesses with gross receipts under $200,000 would be taxed at a $25 flat rate, and businesses making more would be taxed at the current rates.

There are 1,800 licensed businesses in the city. Under this option, 19 percent, or  341, would get relief, Cameron said. It would cost the city $100,000.

In a second option, businesses with gross receipts under $500,000 would be taxed at a $25 flat rate, and businesses with more would be taxed at the current rates.

 Under this option, 28 percent of businesses, or 504, would get relief.  It would cost the city $459,000.

 These two options would provide the most relief for what city staff calls “mid-level businesses.”

 Businesses are charged different rates based on the type of business and how much gross revenue they bring in.

Cameron said that cities in Virginia rely more heavily on BPOL taxes than counties do  because counties have the advantage of a diverse tax base, the BPOL tax lessens the tax burden on homeowners, and cities bear a unique burden for services such as street maintenance and greater demands for public assistance and health services.

The council leaned toward the second option, saying that it would provide more relief to businesses, but did not come to a clear consensus.

Council member Kerry Devine said she doesn’t like isolating the tax, and other council members agreed.

Some council members said that the relief—“only a few hundred dollars”—would not make a big difference to business owners or be enough to persuade a business to locate in the city rather than in the counties.

Council member Bea Paolucci pointed out that even a little relief would be better than nothing, and anything the city can do would help  the businesses that are hurting.

Council member Matt Kelly said he would like to hear from the business community about the options.

All the council members agreed that a public hearing or meeting to discuss the issue would help.

Robyn Sidersky 540/374-5413