Virginia Gov. Bob McDonnell trickled out more of his budget plan for the next biennium Friday, announcing that he would seek $50 million to virtually eliminate a program that requires certain retailers to remit sales tax payments a month early.
Mr. McDonnell had originally sought to start unwinding the accelerated sales tax program in the next fiscal year.
“I have always opposed the policy of playing budget games with sales tax receipts,” he said. “The accelerated sales tax can feel to retailers like a ‘double tax.’ It penalizes Virginia retailers and merchants and skews states revenues. It is bad policy and it needs to be eliminated as quickly as we can.”
In 2010, the General Assembly required merchants with at least $1 million in sales or purchases the previous year to pre-pay 90 percent of their tax liabilities from the previous June a month early.
By the end of the current fiscal year, 95.6 percent of affected dealers would be out of the program under the governor’s proposal. During the 2011 session, the General Assembly raised the threshold to $5.4 million, pushing 7,026 dealers out of the program. Mr. McDonnell is proposing that the threshold be raised again, to $26 million, in June 2012.