The City of Virginia Beach plans to phase out a tax on business machinery and tools, according to this article.
The machinery and tools tax, which is paid by about 200 manufacturing businesses, is estimated to generate $1.46 million in city revenue this fiscal year.
“It’s a hindrance to bringing new jobs into the city,” [Mayor Will] Sessoms said. The tax will be cut by a minimum of 20 percent a year until it’s gone, he said.
This move is in line with a push by various groups to eliminate both the machinery and tools tax and the business, professional and occupational license (BPOL) tax.
One thing is for certain: if Virginia Beach acts unilaterally to eliminate the tax, you can count on the other localities in the region following suit. We saw that happen with the boat tax. There is no way that any locality is willing to give another a competitive advantage.
Of course, what will also happen is that the localities will find a way to make up the revenue. My guess is that we’d see increases in the real estate tax rates, something we’ve experienced before.