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Supervisors may change rules on business personal property tax

Businesses in Albemarle might get a slight break next year when preparing the taxes they pay to the county.

The Board of Supervisors is considering creating a second category of business personal property taxes that supporters say would reduce time spent on paperwork.

“Here’s a great opportunity for the county, with minimal tax impact, to say to small businesses they they’re going to get off their backs a little bit,” said Timothy Hulbert, president of the Charlottesville Regional Chamber of Commerce.

All businesses and sole proprietors must file a form with the county that lists the original cost of all office furniture, equipment, tools, machinery and other items that are either owned or rented. Assessments decrease with each year as property value depreciates.

“The county used to not count items that cost below $250,” Hulbert said. “For the longest time, businesses enjoyed a little bit of a holiday on things underneath the threshold.”

However, that practice was not allowed by state law and the county began taxing all property at the same rate in 2014. That meant that businesses had to itemize all items under $250 which resulted in more paperwork.

This year, the General Assembly passed legislation enabling localities to create the second category at the request of the chamber and Albemarle County. Gov. Terry McAuliffe signed the bill into law this spring during a visit to Charlottesville.

“Establishment of this separate classification also allows the board the option to consider a lower tax rate for this classification, if deemed appropriate, during the upcoming budget review process,” said Betty Burrell, the county’s finance director.

Staff calculated that the second category would not have a dramatic effect on the collection of business personal property taxes. Supervisors agreed to proceed with a public hearing on the matter later this year.

“We also [are planning] an education session that will explain how to do business with Albemarle County and also to help businesses that may be struggling with completing the forms,” Burrell said. That session would be held early in 2016.

The business personal property tax rate is at $ per $100 of assessed value. However, the tax on each item is calculated differently, depending on how long the business has owned it.

However, supervisors declined to consider taxing vehicles that use alternative fuels at a lower rate than the personal property tax rate. That would apply to compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen and electricity.

“Since 1994, Virginia code has allowed for these vehicles to be classified separately for taxation purposes,” Burrell said.

County resident Roger Voisinet made the request to incentivize the purchase of electric vehicles.

“Encouraging the adoption of plug-in electric vehicles via intelligent tax regulations is a way for the county to align its tax regulations with its mission statement and to increase tax revenue at the same time,” Voisinet said.

County Attorney Larry Davis said Chesterfield County grants a tax discount of 10 percent to vehicles that are 100 percent fueled by electricity.

Davis also said Loudon County used to offer a lower tax rate for vehicles that pollute less, but has discontinued the practice.

Staff estimated Albemarle currently receives about $900,000 a year in personal property taxes from this class of vehicles.

“Because of the increase in these types of vehicles, it’s a significant hit to tax collections for personal property for cars,” Davis said.

Supervisors followed the recommendation of county staff not to proceed with a separate tax rate for clean vehicles.

“I don’t think we need a special category for hybrids or more efficient cars,” said Supervisor Liz Palmer, who drives a Toyota Prius.

“As somebody who has been driving one of these cars for nine years, … I don’t think this would be an incentive for anyone to buy one of these cars,” she said.

Voisinet said he was disappointed with the decision.