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Jeff Branscome writes about Spotsylvania County.

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Incentives galore, but what are these businesses?

The Board of Supervisors passed another resolution to offer an unknown business incentives. For this business, they could get up to 20 years of BPOL tax rebates.

I’ve lost count of how many incentives the board has offered to companies, and to date I am not aware of any that have been accepted. When I realized the first four incentives resolutions never amounted to a big announcement, I stopped writing stories about it. Has any company accepted these offers?

If they have been accepted, your tax dollars are going to some mystery company and there is no rule that says once the company accepts the incentives, the county has to announce it at a public meeting. That’s a loophole with the Freedom of Information Act that probably needs to be addressed and a topic for another day.

But Supervisor Jerry Logan, who is anti-BPOL, removed the clause that said in order for the company to get the incentives, the company must keep a certain number of employees during the 20-year period.

Logan is making no secret about his intentions: He wants to abolish the BPOL tax just like Stafford County supervisors did this year. Mr. Logan has also made no secret that he owns a business that is affected by BPOL. He’s announced it a few times.

The BPOL tax is now being used as an incentive tool to lure companies. Just like Fredericksburg did last night, Spotsylvania is waiving the tax to lure companies. Notice how Fredericksburg properly released details of what the incentives are worth, something the county did not do last night.

If the tax is abolished, that is one less tool in the box. There is no proof that I have seen to show that counties without a BPOL tax do better with economic development that those with the BPOL tax. Businessman I have chatted with say the BPOL tax is the least of their worries.

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Permalink: http://news.fredericksburg.com/spotsygovt/2010/03/24/incentives-galore-but-what-are-these-businesses/

  • http://www.thomasforchairman.wordpress.com SteveThomas

    The issue is less BPOL- which, in and of itself, is an unfair tax that is assessed on a company’s gross profits over $1m (in Spotsy). The issue is overall cost of doing business.

    Right now, Spotsy has the lowest cost of doing business in the region.

    That’s why the debate over the current tax rate is important- if $0.83 or higher passes, ir will be a 33%-40% property tax hike on businesses. That would make Spotsy the second highest cost of doing business in the region.

  • MGWORK (Marty)

    Instead of testing exceptions to the Freedom of Information Act in Spotsylvania County why can’t we ask our elected officials to respond to the public in the same way they did with the Thomas-McGuire budget alternative. At least in Fredericksburg we know who’s coming to town and what incentives brokered the deal. In Spotsy we can’t even get invited to the County’s “FOCUS GROUP” meetings that assemble the development, construction, engineering and stakeholders for meetings without minutes. As Dan knows, the press and the public are not invited. It’s no wonder that county constituents don’t have a clue how their money is and will be spent. If Logan has already cast his ballot on BPOL, with a business interest on the side, shouldn’t he recuse himself from any kind of vote on BPOL? So, what’s the cost of doing business in Spotsy when we don’t even know who the BOS and County government are dealing with?

  • LarryG

    I’m with Logan and Thomas on this. Businesses don’t pay taxes, they pass them on to their customers like all the other costs of doing business – and BPOL does kill small business jobs because small businesses ability to expand is often tenuous, often the guy/gal who owns the business is has their own assets at directly at risk. their own mortgage…their own family needs and if we stay out of the way – they can and do create jobs – local jobs.. smart growth jobs for folks who actually do live AND work locally instead of commuting up town for that safe and usually well-paid govt job.

    This BOS desperately needs Mr. Logan’s perspective and Mr. Logan needs to hang tough on how the county can walk-the-walk on being business “friendly”.

  • http://www.thomasforchairman.wordpress.com SteveThomas

    I’m with you, Marty and Larry. BPOL is tough because it is on gross receipts, not profits. If a business lost a million dollars they might still have to pay BPOL, and the local business community go hammered so bad in this economy that 400 fewer businesses pay BPOL this year because their receipts are now under $1m.

    The simpler and cheaper we make it, the better the chance our business community leads the county out of recession. We just have to not shoot ourselves in the foot with tons of higher taxes on business.

  • LarryG

    I always wondered about the idea that we should have a 70/30 residential/commercial mix for optimal … what taxing?

    this is not BPOL… it’s businesses collecting sales taxes which if not located in Spotsy would be going out of Spotsy to another jurisdiction – AKA Central Park/Fredericksburg before Cosners Corner/Harrison Road.

    are we there yet? what is the benefit to 70/30 if the 30 is inside the county?

    is 70/30 a goal of the ED dept?

  • bhaas

    I guess the mystery for me on BPOL is WHY it is a tax on gross receipts rather than on profit?

    Is it that the GA is “ignorant” or is there some “valid” reason?

  • SteveThomas

    Larry, it’s not so much a 70-30 Res-Comm split we want; it’s having enough industrial (which includes manufacturing, technology, and other higher-end jobs) to support the rest. That’s what we lack ultimately, and we really need more of it. But those businesses are also most sensitive to cost of doing business increases.

  • dtelvock

    Good question, Bill. We should probably look at the code section that allows BPOL and see when it was first created and who sponsored it. I wouldn’t doubt the person is still in office.

    But taxing a business on gross receipts is no different than the government taxing our gross income, I suppose. I still cannot believe how much taxes are taken from my paycheck. It is more than 30 percent of what I make.

  • LarryG

    yes – I’d be curious to do – for the folks who do think we should have BPOL why we can’t adjust it to be net.

    BPOL is not a tax on businesses any more than the other costs they have to pay to stay in business – all of which must be incorporated into the price of goods and services that you would buy from them. The only difference is that the BPOL is not a separate tax on your receipt but rest assured it’s there.

    my other current pet peeve:

    When members of the BOS and SB decry Richmond for not funding us adequately what they are really complaining about is Richmond not raising taxes on us to make up for the sales and income tax shortfall due to the down economy.

    the only way for Richmond to send us more money – is to get it from you and me via higher taxes – .. I’d like to see certain folks on the BOS and SB fess up and start using this irresponsible argument.

    someone must think that Richmond is taking this money and hiding it or something.

  • dfrazier

    BPOL tax is covered/authorized by Code of Virginia 58.1-3703. From a Dept of Taxation BPOL Guidelines publication I have (no longer on their website), this appears to go back to 1948, with several legislative changes through the years. The most significant change was in 1996, to ensure a more uniform administration of BPOL taxes throughout the state. Most localities appear to have the BPOL, and those that don’t, including Stafford, have a merchants capital tax, which is based on the inventory value of the business at 12/31. For those who don’t know, the Code of VA sets a maximum rate that a locality can charge for each class under this tax, and Spotsy is charging 50% of that rate, while FBurg is charging the full 100%.

  • dtelvock

    Good info. Thanks Dfrazier.

  • wizard1073

    This thread may be dead by now, but I’ll leave my 2 cents for posterity.

    The problem with BPOL rebates being used as a lure is that it tells all the other businesses that still pay it that they are suckers and not as important. “Some pigs are more equal than others” comes to mind.

    Anytime the government (at any level) shows favoritism, whether inadvertently or not, is a bad day for liberty, Someone else is eating at my expense, and the government is the one taking my lunch and giving it away.

    I do own a small business in Spotsy, with ten employees (max will be around 40 when we finish growing). This behavior just makes me mad.

  • dtelvock

    I can liven it up a bit :) Let me think of something