Translate[Archived] Question #43: Provide the revenue impact of increasing the BPOL rates for Renting of Residential Property and Renting of Commercial Property up to the state maximum.
Question:
Can you provide the
revenue impact of increasing the BPOL rates for Renting of Residential Property
and Renting of Commercial Property up to the state maximum? What are the rates
for this BPOL subcategory for our neighboring jurisdictions?
Response:
The ability of localities, including chartered cities, to tax this type of activity is governed by Virginia Code § 58.1-3703(C)(7). Most localities in Virginia are unable to levy a tax on this activity, as it is specifically exempted by statute unless an ordinance was adopted prior to 1974. The City adopted its ordinance prior to 1974, and the City therefore has grandfathered authority to levy this tax. Any changes to the existing ordinance could violate the existing grandfather clause and call into question our ability to legally continue to levy this tax.
For reference, however, the maximum rate allowable by State for renting of residential/commercial properties is $0.58 per $100 gross receipts. The City's current rate is $0.50 per $100 gross receipts for residential properties and $0.35 per $100 gross receipts for commercial properties.
Due to the typical exemption status for this category, the Weldon Cooper Center for Public Service at the University of Virginia reported “in 2016, only 23 localities reported taxing such business.” In Northern Virginia, this includes the following localities:
Staff strongly recommends against making any changes to these BPOL categories, as this could violate an existing ‘grandfather’ clause under state law and jeopardize our ability to assess and collect nearly $5 million in current BPOL revenue.