You can now walk into a retailer in Virginia (or buy from a Virginia retailer online) and get your gold or silver without having to pay sales tax — but only if you have $1,000 to spend.
House Bill 1648 and Senate Bill 1336, signed into law this year, were companion bills that created a new sales and use tax exemption for gold, silver and platinum bullion. Similar bills had been offered for years without success. Are we looking at another example of a government policy promoting income inequality? To get the exemption, you have to spend at least $1,000. The buyer picking up $250 or $500 of bullion is still being taxed.
Effective July 1 the sales and use tax (5.3 percent in most of Virginia, 6 percent in Northern Virginia and Hampton Roads) was not applied to items which met the following tests:
- It must be refined to a purity of at least 90 percent precious metal. It can be a bar, ingot or coin – but cannot be artwork or jewelry.
- The sale price must not exceed 120 percent of the value of the precious metal content.
- The total transaction, which can include more than one exempt item, must exceed $1,000. That is only one ounce of gold, but it is more than four pounds of silver.
You can read the Tax Department guidelines here. Disclaimer: Yes, I worked in support of this bill on behalf of a Virginia Beach company. The $1,000 minimum purchase matches Maryland’s law and in theory limited the fiscal impact. Actually, I’m convinced Virginia has been collecting very little tax on bullion. It was too easy not to pay it.
More than 30 other states – including the largest – already exempt these popular investment items or have no sales tax at all. Virginia dealers have been required to impose the sales tax on any Virginia buyer, which meant most Virginia buyers purchased their bullion somewhere else to save 5-6 percent. They went to the U.S. Mint, which charges no sales tax, or used out-of-state on-line providers and ignored the requirement to pay the use tax.
The smaller investor, spending less than $1,000, will still be doing that. They will still turn around and walk out of the store or cancel the e-transaction before paying the tax. This market is a perfect example of the impact e-commerce makes when there is any marginal price advantage.
Virginia remains behind the times when it comes to the other (and larger) side of this business – collector coins. The introduced bills also would have exempted legal tender, but that far the Assembly would not go. Yes, Virginia, you tax hard money — another investment item not taxed by 30 or more other states.
Investors in coins do much of their business at large national and regional shows, which fill hotel rooms and restaurants in their host cities for a week – generating plenty of other taxes to compensate for the lost sales tax on the coins. None of those lucrative shows will ever come to Virginia unless the General Assembly takes that additional step and stops taxing money. Virginia collectors and investors in these products (big and small) will continue to bypass Virginia dealers and shop on-line.
Stephen D. Haner is the principal of Black Walnut Strategies.There are currently no comments highlighted.