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1997 SESSION

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SENATE JOINT RESOLUTION NO. 385 Requesting the Commission on State and Local Government Responsibility and Taxing Authority and the Governor's Commission on Tax Equity to study the advisability of reducing or eliminating the tangible personal property tax in the Commonwealth.

Agreed to by the Senate, February 22, 1997 Agreed to by the House of Delegates, February 21, 1997

WHEREAS, the tangible personal property tax has been administered by counties, cities, and towns in the Commonwealth since 1926; and

WHEREAS, the tangible personal property tax generates over $1 billion annually and is the second largest source of revenue for Virginia's local governments; and

WHEREAS, an analysis of the many classes of personal property reveals that the tangible personal property tax in the Commonwealth is levied primarily on motor vehicles, boats, and aircraft; and

WHEREAS, rapid increases in the costs of the items typically subjected to the tangible personal property tax, notably motor vehicles, have caused many citizens to express concern over the rising rate of increases in tangible personal property tax assessments; and

WHEREAS, the tangible personal property tax generally is required to be paid in a single installment, which creates an undue burden on many taxpayers; and

WHEREAS, the number of classes of tangible personal property, many of which are taxed at a lower rate than the rate on the general classification of personal property applicable to motor vehicles, has increased from 8 in 1979 to 24 in 1995; and

WHEREAS, the proliferation in the number of classes of tangible personal property has compounded the perception that the owners of motor vehicles are required to bear a disproportionate share of the local tax burden; and

WHEREAS, limiting, reducing, or eliminating local taxation of tangible personal property would substantially affect the ability of the counties, cities, and towns of the Commonwealth to raise adequate revenues to provide essential services, unless localities are authorized to implement alternative methods of generating revenue; now, therefore, be it

RESOLVED by the Senate, the House of Delegates concurring, That the Commission on State and Local Government Responsibility and Taxing Authority and the Governor's Commission on Tax Equity be requested to study the advisability of reducing or eliminating the tangible personal property tax in the Commonwealth. In their deliberations, the commissions shall (i) examine the fairness of the current system of taxing tangible personal property, (ii) determine the advantages and disadvantages of any alternative sources of revenue that may be authorized to offset any reduction or elimination of the tangible personal property tax, and (iii) consider the advisability of replacing the personal property tax with a local option income tax or sales tax.

The commissions shall complete their work in time to submit their findings and recommendations to the Governor and the 1998 Session of the General Assembly as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents.