- The Washington Times - Tuesday, December 18, 2001

RICHMOND Gov. James S. Gilmore III yesterday proposed that the state finish phasing out the car tax by 2004, then abolish it altogether by 2005 through a constitutional amendment that would give local governments a share of the state income tax.
Mr. Gilmore welcomed the recommendation of a panel he appointed in July to study reforming Virginia's patchwork of taxes. Under Mr. Gilmore's proposals, cities and counties eventually would receive "a fair share" of the state's individual income tax revenue.
The panel recommended ultimately giving localities up to one-fifth of the income tax revenues, but Mr. Gilmore said he would have to study the proposal before committing to a specific percentage.
Other recommendations the panel offered in a 48-page report include eliminating the state's Business Professional Occupational License tax, providing targeted incentives for creating and expanding businesses in Virginia, and keeping Internet access and transactions tax-free.
The only proposal to which Mr. Gilmore committed yesterday, however, was the constitutional amendment wiping out the personal property tax that cities and counties impose on nonbusiness vehicles. Mr. Gilmore was elected in 1997 largely on the promise to phase out the "hated" tax.
"I want my policy people to go over the recommendation, and it's something that the legislature is going to have to work on. I would expect a very thoroughgoing discussion of this in the next General Assembly," said Mr. Gilmore, whose term ends Jan. 12.
The amendment would end what Mr. Gilmore began in 1998 when he used his election mandate to push a four-year phase-out of the car tax. Under the revised plan he will propose to tomorrow to legislative money committees, Virginians would pay no tax on the first $20,000 value of their cars, beginning Jan. 1, 2004.
The constitutional amendment he hopes to have in place in 2005 would eliminate the tax completely, regardless of a car's value. Under the amendment, the state would stop reimbursing cities and counties for the local revenue lost to the car-tax phaseout and instead give localities a share of the state's income tax receipts.
"This will give localities access to a reliable, rolling source of revenue just as the state does," Mr. Gilmore said after a luncheon speech to the panel headed by former U.S. Rep. Thomas J. Bliley Jr., a Republican. The governor created the panel in July after a dispute with the General Assembly over the pace of car-tax relief that resulted in the state's first failure to amend its two-year budget at midcycle. The impasse also left tens of thousands of state employees, schoolteachers and sheriff's deputies without pay raises.
The governor's proposal comes after legislative budget analysts predicted shortfalls as high as $1.3 billion for the current budget year and $2.1 billion for the 2003-2004 budget cycle.

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