Machinery and Tools Tax Report (language only)

Item 255 #1s

Language

Page 263, after line 32, insert:

"D. The Secretary of Finance shall convene a working group of stakeholders, to include but not be 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 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 growth in individual income tax, sales tax and corporate income tax revenue from manufacturing growth; (2) sales tax revenue derived from internet sales taxes collected after July 1, 2019, that are associated with 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 receiving reimbursement from sales tax revenue derived from internet sales taxes collected after July 1, 2019, that are associated with legislation to bring Virginia into compliance with the "Wayfair" Supreme Court Case.

The 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 the following: (1) assessment of the economic benefit to local governments and the Commonwealth of Virginia for the growth in manufacturing machinery and tools investment; (2) assessment of the best method of disposition of revenues from state general fund revenues to local governments, specifically the method established by § 58.1-662, Code of Virginia; (3) assessment of the economic impact on local governments for the loss of machinery and tools tax revenue for the first five years; and (4) assessment of how many states currently tax a manufacturer's 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."