Pace Quickens to Eliminate Virginia's Accelerated Sales Tax
- Dec 12, 2012 | Gail Cole
Governor Bob McDonnell's (R) office has issued a press release announcing proposed budget amendments that would eliminate the accelerated sales tax for half of the businesses in Virginia still paying it.
Virginia established an Accelerated Sales Tax (AST) program during fiscal year 2010, in order to help close a budget deficit of nearly $4 billion. The program originally required all dealers with $1 million or more in taxable sales and/or purchases in the previous year to make early estimated sales tax payments. The governor began phasing out the program in 2011, when accelerated payments were only required from businesses with an "annual taxable threshold of $5.4 million."
Prior to the enactment of the AST, taxes on sales made in June were not due until July 20. Businesses required to pay the AST tax must make the June payment on June 30 or face a 6% penalty. Since in many instances the payment must be made before the sales tax has been collected, this "is a burden on many businesses." It's no wonder the AST has been unpopular from the outset. It has frequently been called a "budget-balancing gimmick."
Governor McDonnell's position on the accelerated sales tax is unequivocal:
"The accelerated sales tax is bad policy and needs to be eliminated as quickly as we can. … [It] penalizes Virginia retailers and merchants and skews states revenue. … We need to get this anti-business policy off our books as soon as possible… ."
He is not alone. A spokesperson for the Virginia Retail Merchants Association said "We applaud the governor for his commitment to raise the threshold on AST thereby reducing the number of retailers impacted by this burden."
If lawmakers agree to the governor's proposed budget amendments, "98% of the 9,696 dealers originally required to make AST payments will no longer be subject to AST in FY 2014."