An update from VML on the M&T tax from Virginia Municipal League:

HB 1636 (Purkey) classifies as capital taxable solely by the state (1) machinery and tools (M&T) that have not been in service for more than three years, (2) machinery and equipment used by farm wineries, and (3) idle machinery and tools. VML and VACo oppose the bill, which is expected to pass the House of Delegates. The Senate Finance Committee will consider the measure after crossover.

Talking points

• In FY 2009, counties, cities and towns collected more than $213.7 million in M&T revenues; these important local general funds support key services, including K-12 education and public safety.
• Manufacturers are only required to pay M&T on tangible property used directly in the manufacturing process. The rates are often times less than local rates on the general class of tangible personal property. Also, all other tangible personal property of manufacturers, other than motor vehicles, is exempt from personal property taxation. Idle machinery and tools are also exempt from M&T. Surrounding states do not provide these benefits.
• Manufacturers do not pay BPOL or merchant’s capital taxes.
• HB 1636 will actually lead to higher administrative costs for both localities and manufacturers. To enforce the measure localities will have to increase their audits, and manufacturers will have additional recordkeeping duties to document which machines are exempt.

Please contact your house representative and encourage them to support Manassas in this.  If this tax is repealed, we’re running out of options to raise revenue at the local level, and our friends in the House of Delegates continue to impose more unfunded mandates on local government while reducing funding for police and schools….