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Thread: Virginia Sales Tax Increase

  1. #1
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    Default Virginia Sales Tax Increase

    Virginia is raising its sales tax rate on July 1st. Statewide it will go to 5.3% and in the Northern Virginia area around Washington DC it will go to 6%, as the county localities are adding on .7%. It will also go to 6% in the Hampton Roads/ VA Beach area.

    Our state legislature has long been controlled by the rural areas of the state, and its a big state. Money is siphoned off from the Northern Virginia area and used around the state to build these wonderful 4-lane limited access highways from rural town to rural town. I never cease to be amazed when I drive around Farmville or Danville or Lynchburg on these high quality roads that have no traffic on them. Meanwhile where I live, we are stuck with 2 lane country roads and single lane bridges that carry 20,000 cars a day on major commuter routes. So what the state legislature did was pass a bill to allow certain jurisdictions to add a portion to the sales tax and they could keep that at home. In our case, it was .7% to round that tax up to 6% even. I personally think that's a total rip-off for the citizens of those areas and question the legality of having a tiered sales tax system like that? I guess its not much difference than a City Sales Tax like you run into in New York City and the like, but it irritates me to see the unequal distribution of money to take care of things in rural areas of the state while the money machine areas are used to pump up the state economy. Richmond is so generous to allow us to have an added tax and keep it at home....

    Anyways, that's the story. Buy a sofa from the dealer in - say - Harrisonburg VA and you will pay 5.3% sales tax if a VA resident. Buy it from my store and its 6% for VA residents. Doesn't seem right, does it? I have told many of my store customers about it and not one person was aware of these new laws that I spoke to. I think this is going to come as a surprise to most people in Virginia.

    Also, If you're thinking of buying a car in Virginia, get it now as the sales tax on cars is going up from 3% to 4% July 1st as well. That's a $ 400 increase on a $ 40K car.

    VA Tax Changes if you want to read them all:

    Sales & Use Tax

    Raises the state sales and use tax from 5.0 percent to 5.3 percent, effective July 1, 2013. Of this increase, 0.175 percent goes to highway maintenance and operations, 0.050 percent goes to intercity rail, and 0.075 percent goes to mass transit.
    An existing sales tax exemption for out-of-state mail order catalog items under $100 is removed.
    Imposes an additional 0.7 percent sales tax in the counties and cities of the Northern Virginia Transportation Authority and the Hampton Roads Region (the tax will thus total 6 percent in those areas). The additional sales tax will not apply to purchases of groceries but will otherwise have the same tax base as the state tax, and will be collected by the state on one consolidated return.

    Requires the tax commissioner to give sellers at least 30 days’ notice of local sales tax changes, and that changes can only become effective on the first day of a calendar quarter. Holds sellers harmless for sales tax collection errors caused by erroneous state information.
    Caps state use tax on equipment brought into the state for performing contracts at 5 percent. Sales of aircraft are also taxed at 2 percent and watercraft at 2 percent with a maximum tax of $1,000.

    Gasoline Taxes

    Repeals the 17.5 cent gasoline tax effective July 1, 2013, replacing it with a 3.5 percent wholesale gasoline tax. The tax will be computed and modified twice each year based on the average wholesale price, on January 1 and July 1. The average wholesale price calculation cannot be less than the actual wholesale price of self-serve gasoline on February 20, 2013 (which news reports say equals $3.50 per gallon). At that $3.50 per gallon rate, what was a 17.5 cent tax will now be at minimum a 12.25 cent tax ($3.50 X 3.5 percent).
    A similar formula is used for taxing diesel, which presently pays a 17.5 cent tax and after July 1, 2013, will pay a 6 percent wholesale tax.

    If Congress does not enact legislation by January 1, 2015 giving Virginia the authority to collect sales tax from remote sellers with no physical presence in the state, the 3.5 percent tax will instead become a 5.1 percent tax, effective January 1, 2015. Again, the average wholesale price calculation cannot be less than the actual wholesale price of self-serve gasoline on February 20, 2013; at that $3.50 per gallon rate, what was a 17.5 cent tax will now be at minimum a 17.85 cent tax ($3.50 X 5.1 percent). The tax can now go up with any rise in gasoline prices, although in a manner now less transparent to consumers.
    Expands the existing 2.1 percent gasoline wholesaler tax in the Northern Virginia Transportation Authority region to the Hampton Roads region.

    Car Taxes

    Tax on the sale of a car, presently 3 percent, will rise to 4 percent (July 1, 2013), then to 4.1 percent (July 1, 2014), then to 4.2 percent (July 1, 2015), then to 4.3 percent (July 1, 2016). The minimum tax is raised from $35 to $75.
    Raises the statewide $50 license tax for electric vehicles to $100.

    Changes license tax due date for all vehicles from the last day of December to the date of registration and each subsequent renewal.

    Other Taxes

    Imposes a real estate transfer tax of 0.25 percent, termed a “regional congestion relief fee,” for land or property transfers in the Northern Virginia Transportation Authority area.
    Imposes a 3 percent hotel tax, on top of existing hotel taxes, in the Northern Virginia Transportation Authority area.

    Miscellaneous

    Dedicates $300 million of the new revenue to the Metrorail silver line extension to Dulles International Airport.

    Prohibits tolls on Interstate 95 south of Fredericksburg without further approval by the Legislature. Virginia had applied for a waiver from the federal government to do so in a limited fashion, so this kills that.

    Northern Virginia Transportation Authority consists of the Counties of Arlington, Fairfax, Loudoun, and Prince William, and the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.
    Hampton Roads region consists of Counties of Gloucester, Isle of Wight, James City, and York, and the cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, and Williamsburg.
    Last edited by drcollie; 06-23-2013 at 09:43 AM.
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