Governor visits Suffolk to tout tax reform

Published 12:00 am Thursday, January 8, 2004

Suffolk News-Herald

Since announcing his tax reform proposal more than six weeks ago, Gov. Mark Warner told a Suffolk Rotary audience Thursday that he now understands why state politicians often talk about tax reform but don’t do anything about it.

Warner stopped in Suffolk to push his &uot;A Commonwealth of Opportunity Plan,&uot; the centerpiece of which is a 1-cent increase in the state sales tax on non-food items and an increase in the tax on a pack of cigarettes from 2 cents – the lowest in the nation – to 25 cents. It also calls for an increase from 5.75 percent to 6.25 percent in the income tax rates paid by Virginians whose taxable income exceeds $100,000 a year.

Email newsletter signup

Critics contend that the sales tax increase would amount to a net loss for most Virginians and that it would even further hinder the state’s slow recovery.

While the plan is designed to generate an additional $500 million in revenue for the state, Warner is quick to note that it creates no new programs or entitlements; that 65 percent of state residents will pay less in taxes; and that the plan merely enables the state to meet its obligations to the localities, to education and transportation as well as shoring up Virginia’s good credit.

He noted for instance that Moody’s has put the state on &uot;credit watch&uot; and that Virginia is in danger of losing it’s AAA bond rating.

&uot;That’s the worst kind of tax increase,&uot; he said. &uot;It will increase our borrowing costs.&uot;

Warner said that as a result of the car tax roll back – &uot;The gift that keeps on giving,&uot; he quipped – increased costs of incarcerating prisoners resulting from the elimination of parole and the approximately 50 tax breaks the General Assembly has granted since 1995, more than $1.5 billion has been removed from the state’s revenue stream. This resulted in the budget shortfall he faced upon taking office two years ago that eventually grew to $6 billion – the biggest shortfall in state history.

As a result, he has presided over the biggest reduction in state government ever – 50 agencies, 5,000 positions and a 20 percent cut for every agency.

Because of the lack of revenue, he said, the state cannot fund its constitutional obligations to education – both K-12 and higher education – forcing localities to increase property taxes and colleges to increase tuitions. That’s dangerous for the state’s economic well-being, the governor said, because a well-educated, well-trained workforce is the most important thing companies look for in making decisions on where to locate.

&uot;Candidly, I don’t want my kids to grow up in a Virginia that doesn’t put another dime into higher education,&uot; he said.

His proposal would generate an additional $761 million for education in Virginia, including $12 million for Suffolk.

He said the sales tax increase on non-food items will keep Virginia’s rate lower than that in neighboring states and that his proposal will make the state’s income tax more progressive while at the same time keeping the highest rate below that of North Carolina and other neighboring states.

&uot;I want Virginia at the end of the day to be below the average in every tax bracket,&uot; he said.

Warner has set up a calculator residents can access on the Internet that will allow them to see how his proposal will impact them personally. Go to