Raised BPOL thresholds good for small business, bad for county coffers

Increasing the threshold of the infamous BPOL tax in Prince William County is just the start of the conversation.

The BPOL tax (business and professional licensing tax) is collected on the amount of gross receipts from licensed local businesses that generate at least $250,000 in gross sales. Tax rates vary between 5 cents and 33 cents per every $100. The tax collects $26.5 million in annual revenue for the county.

The Prince William County Board of Supervisors voted earlier this year to increase the “BPOL threshold” from $250,000 to $300,000 in 2016. The plan to be voted on Tuesday calls for subsequent threshold increases to $350,000, $400,000, $450,000, and $500,000 in 2017, 2018, 2019, 2020, respectively.

By 2020 under the plan, the county would lose nearly $1 million in tax funding. To recoup the loss, the county plans to add a 3 cent per every $100 in funds received by federally-funded companies doing research or development in the computer and science fields.

The plan has bi-partisan among Democrats and Republican members of the Board of Supervisors.

“As part of the budget discussion earlier this year, my colleagues and I agreed that we needed to be doing more to help existing small businesses grow and thrive, and we needed to continue reducing barriers to new firms entering the market,” stated Woodbridge District Supervisor Frank Principi in an email.

“There is no question that small firms create more net jobs than do large firms – and this resolution is designed specifically to help create new jobs while simultaneously fostering new investment and promoting innovation. Couple this with the fact that Prince William County has some of the lowest taxes in Northern Virginia, and you see us taking another important step toward making Prince William County a more desirable place to do business.”

The move could also be good for start-up businesses.

“…It is my hope and expectation that this change will strengthen and retain existing businesses and attract new ones, particularly small business start-ups who are very sensitive to the adverse impacts of the BPOL tax,” stated Coles District Supervisor Marty Nohe, in an email obtained by Potomac Local.

“It is further my hope that this increase in small business activity will allow market forces to drive an increased overall valuation in commercial properties, which will make at least some small dent in the residential-to-commercial real estate tax ratio/tax base.”

The Prince William Chamber has long urged Prince William officials to raise the threshold. Corey Stewart, Chairman of the Board of Supervisors, wants to phase out the BPOL tax completely for small businesses.

“We’re not looking at doing this for the Walmarts or Targets that aren’t really impacted by this… these aren’t the kinds of businesses we are targeting for economic development, anyway,” said Stewart.

The conversation on just how to phase out the tax for small businesses will take “several months.” The details, to include what defines a small business that would be totally exempt from BPOL, and what funding source will replace the lost BPOL revenues, still need to be worked out.

The Board is expected to vote on the matter during their 2 p.m. meeting.