Chief Patron: Robinson
Work Group - Review Machinery and Tools Tax (language only)

Item 255 #1h

Language

Page 263, after line 32, insert:

"D. The Virginia Secretary of Finance shall convene a working group of stakeholders, to include but not limited to the Virginia Municipal League, Virginia Association of Counties, Virginia Manufacturers Association and the Virginia Economic Developers Association, to prepare a proposal by October 1, 2019 that allows for Virginia to eliminate the first five (5) years of machinery and tools taxation for all new equipment put into service after January 1, 2020 and reimburse local governments on a pro-rata basis for all foregone revenues not to exceed $50 million annually statewide. The proposal shall include recommendations for multiple sources of revenue to pay for the proposal. The revenue sources shall include: 1) dynamic economic growth in individual income tax, sales tax and corporate tax revenue from manufacturing growth; 2) sales tax revenue derived from internet sales taxes collected after July 1, 2019 that are associated with tax legislation to bring Virginia into compliance with the "Wayfair" Supreme Court Case. Further, the plan shall include, for those localities not currently assessing the machinery and tools tax, an option for reducing business personal property taxes by $1 million per year and receive reimbursement from sales tax revenue derived from internet sales taxes collected after July 1, 2019 that are associated with tax legislation to bring Virginia into compliance with the "Wayfair" Supreme Court Case.

The Virginia Secretary of Commerce and Trade, the Virginia Economic Development Partnership, and the Virginia Department of Taxation shall provide technical assistance to the working group, specifically contributing to the following:

1) Assess the economic benefit to local governments and the Commonwealth of Virginia for the growth in manufacturing and tools investments.

2) Assess the best method of disposition of revenues from the state general fund revenues to local governments, specifically the method established by § 58.1-662 for the Disposition of the Communications Sales and Use Tax Trust Fund Revenue.

3) Asses the economic impact on local governments for the loss machinery and tools tax revenue for the first five (5) years.

4) Assess how many states currently tax a manufacturers machinery and tools and compare the rates for competitiveness, specifically against the states of North Carolina, South Carolina, Georgia, Florida, Mississippi, Alabama, Arkansas, Tennessee, Kentucky, and West Virginia."