Va. legislators pass numerous tax breaks in election year

Associated Press • Mar 10, 2007 at 6:24 AM

RICHMOND - While most legislators were busy haggling over how to increase funding for road and rail improvements, several used the election-year session to push through measures to keep more money in taxpayers' pockets.

Lawmakers passed numerous tax breaks, including income tax relief for the poorest Virginians and new exemptions from the state's 5 percent sales tax.

Two measures pushed by Democratic Gov. Timothy M. Kaine and carried by Republican legislators won easy passage: a bill to raise the minimum threshold for filing state income taxes and a constitutional amendment to allow local governments to discount real estate taxes on homes by up to one fifth.

Kaine asked legislators to raise the tax filing threshold from $7,000 to $12,000 for individuals and from $14,000 to $24,000 for couples filing jointly. They instead passed a phased-in plan that would put the filing threshold at $11,250 for individuals and $23,900 for couples by 2012.

"Raising the filing threshold is very significant tax relief for upwards of 10 percent of state tax filers at the lower end," Kaine spokesman Kevin Hall said.

Another Kaine initiative - allowing local governments to exempt 20 percent of a house's value from real estate taxes - was among his first campaign promises intended to combat skyrocketing home assessments that determine taxes.

The constitutional amendment must pass the legislature again next year to get on the ballot.

Legislators also passed two new sales tax "holidays" - popular temporary suspensions of the tax collected on certain goods. Items used to prepare for hurricanes would be exempt from sales tax during the last week of May each year. For four days each October, shoppers wouldn't have to pay sales tax on Energy Star-qualified appliances and products.

Both await action by Kaine, but Hall said the governor supports them.

In 2006, lawmakers passed the state's first sales tax holiday on back-to-school supplies. While retailers weren't required to track of the amount of taxes withheld, officials deemed the three-day holiday a huge success.

The two new sales tax holidays will benefit everyone because they drive sales for retailers, give consumers a tax break and persuade Virginians to purchase beneficial items, said Laurie Peterson Aldrich, president of the Virginia Retail Merchants Association.

Aldrich said even though politics may have played a part in their passage, she doesn't expect to see legislators continue to add tax holidays.

"I think they wanted to say that they gave something back to consumers and gave a tax break, and that's one way they can say that they did that," Aldrich said.

"I don't know that those are going to be huge in their pamphlets, but I do think that will play a small part," she said.

Delegate Sam Nixon, R-Chesterfield, pushed through several moneysaving measures, including a tax exemption for maintenance and building supplies for the state's more than 7,700 churches and an increase in unemployment compensation from $347 to $363. Nixon also sponsored a bill to exempt those living on federal military bases or installations from paying a federal franchise fee on cable television. Last year the state rolled cable television franchise fees into a so-called communications sales and use tax, but those living on the federal bases were stuck paying both. The bill would go into effect as soon as Kaine signs it and would be retroactive to Jan. 1. Nixon said his bills weren't motivated by the looming elections. He has carried the unemployment compensation rate adjustment bill for several consecutive years; he is the one who sponsored the communications tax bill last year and said he felt he needed to fix the double-billing problem; and he said he has worked with churches on a variety of bills. "In none of those three did I have my eye on the November elections," he said. Legislators also passed tax deductions for organ donors and those who put money into the Virginia College Savings plan and exempted inoperable vehicles from local licenses taxes and fees. The state tax department doesn't keep track of the number of tax bills passed each year, but spokesman Joel Davison said 2007 didn't produce an unusual number. Even in a year when all 140 legislative seats are up for election, passage of all voter-friendly measures is not guaranteed. Proposals to increase the minimum wage, reinstate the car tax rollback, exempt computers from sales tax and give tax credits for toll payments and adoptions from local animal shelters died during the 46-day session. "They don't pass all of these proposals willy-nilly. It would break the bank," said Larry Sabato, director of the University of Virginia Center for Politics. "The items that pass tend to be things that have broad appeal and cross party and ideological lines." But having the pressure of an election doesn't hurt, Sabato said. "It is an election year and voters normally ask, ‘What have you done for me lately?'" Sabato said. "Delegates, senators and governors like to have an answer."

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