Locals react to BPOL tax

By Uriah A. Kiser

Published: July 11, 2008

STAFFORD — A controversial new tax has one business owner saying the tariff will take a negative toll on the community.

The Stafford County Board of Supervisors approved the Business and Professional Lisencing tax, or BPOL, in a highly contested July 1 vote. The county became one of the last jurisdictions in the Commonwealth to enact such a tax.

More than 300 people attended the supervisors’ meeting, with more than 84 percent speaking out against the levy.

Tricia Gonzalez, owner of the Daily Grind Coffee shop in Stafford was one of those people.

“I have done so much for Stafford County, that’s why this new tax makes me so mad,“ said Gonzalez.

Gonzalez opened her shop with a partner last year but is now running the business solo. She said the new tax would cause her to barely break even, diminishing her chances of making a profit.

BPOL is a tax that is collected on businesses gross receipts, not net profits like conventional commercial taxes.

Under Stafford County’s BPOL tax policy, receipts up to $200,000 would be exempt from the tax. Businesses with receipts less than the threshold will pay a $50 licensing fee to the county.

The county will only charge only half of the maximum rate allowed by the state and cap the total amount collected from a business to $150,000.

Gonzalez said it would take just over eight months for her small coffee shop to meet the threshold, and then she would have to pay.

Though the BPOL rates vary between the type of business and amount tax that can be collected, the average retail business with gross receipts of at least $500,000 per year would pay an additional $300 in taxes annually, according to Scott Mayausky, Stafford’s revenue commissioner.

The tax will not be collected until 2010.

Supporters of the tax, like Stafford Board of Supervisors’ Chairman George Schwartz, D-Falmouth, said it would ease the burden on overtaxed homeowners.
“The business owners who spoke at that meeting do not represent the silent majority of more than 120,000 residents who wanted the tax,“ said Schwartz.

The supervisor said the tax is expected to bring in $2.6 million in new revenue, after the elimination of the county’s current Merchants Capital tax, which BPOL replaces.

When supervisors approved BPOL last week they mandated all the newly generated tax revenue to go to fund county road and transportation improvements.

In addition to transportation, Schwartz would like to see more of the money go to both the sheriff’s and fire and rescue departments.

He admitted he would need to have the board vote on such a measure before any monies were diverted from the transportation fund.

The City of Fredericksburg, which has had a BPOL tax in place for years, has had recent success in attracting new businesses by offering a BPOL tax exemption.

Kevin Gullette, Fredericksburg’s economic development director, said the exemption is used as an incentive to attract new businesses to the city.

Kalahari Resorts, a Wisconsin-based company that is looking to build a $200 million water park and hotel in the city’s Celebrate Virginia complex, has been offered a 20-year exemption from paying BPOL.

Wegman’s grocery store, which will also be located in the “Celebrate” complex, will receive a 10-year exemption. The Capital Ale House, a Richmond-based restaurant and pub that plans to open in downtown Fredericksburg later this year, also gets a 10-year reprieve.

“We only offer the incentive to businesses looking to expand, or new businesses wanting to open,“ said Gullette. “If we offered it to existing businesses it would become more of a subsidy.“

Fredericksburg’s decision on whether or not to offer a businesses a BPOL exemption hangs on many factors.

The city evaluates how many jobs the company plans to bring in? How much the company is willing to invest into the city? How much the company will promote a sense of community? What type of environmental improvements the company plans to bring to the city? And how much local tax revenue does the company plan to generate?

If the figure is more than $100,000, the city is more inclined to offer the BPOL exemption, according to Gullette.

Gonzalez’s coffee shop does not generate that kind of money, and Stafford currently does not offer any type of broad exemption for retail or service-industry businesses, according to Mayausky.

Gonzalez, who has three children in Stafford schools, said she opened the shop as a way to give back to the community. She said she donates more than $1,500 of goods and services from her shop annually, mostly to local schools.

The storeowner said she has seen a recent 24 percent increase in her regular commercial property taxes. With the addition of BPOL, Gonzalez said she would have to cut back on the amount of donations made to charity.

“I’m going to start thinking like, ‘Am I going to be here next year?” said Gonzalez.

Contributing writer Jim Lawrence assisted with this report.