Tuesday, November 25, 2003

Yesterday, someone mentioned that the state sales tax is going to go up a penny. I wasn’t too surprised, it was only a matter of time before our Democratic Governor would implement some kind of tax increase. It turns out he has a tax reform plan that includes the sales tax increase, a decrease in the food tax, an increase in the cigarette tax, the estate tax on farms and small businesses would be repealed, and the repeal of the car tax would be completed.

Under the plan, most Virginians would pay more sales tax but less income tax. They would pay higher taxes if they smoke but lower taxes on groceries. Big corporations would pay more, but farmers would no longer be hit with an estate tax. Everyone would pay less tax on the cars they drive.

Republican lawmakers, who control both chambers of Virginia’s legislature, did not declare the plan dead on arrival. But several challenged Warner’s repeated claim that 65 percent of Virginians will pay lower taxes if the plan is adopted after the General Assembly session begins in January.

“All I know is, when you are a poor person who goes to try to buy clothes, it isn’t going to be a tax cut then,” said House Majority Leader H. Morgan Griffith (R-Salem), referring to the proposed one-cent sales tax increase.

[...]

Warner’s plan would generate $1 billion in new money for the state.

The centerpiece is a one-cent increase in the sales tax, which would raise about $750 million a year. He also proposes to raise the cigarette tax from 2.5 cents to 25 cents per pack and to add a new top tax rate of 6.25 percent, up from 5.75 percent, on people with taxable income of more than $100,000 a year.

At the same time, he proposes to finish the phaseout of the car tax in four years and reduce the sales tax on groceries, from 4 cents to 2.5 cents. He proposed income tax breaks that would benefit all Virginians but especially low-income workers.