Can We Call It a “Decelerated” Sales Tax Now?

Less of a rip-off than before...

Gov. Bob McDonnell is asking the General Assembly to hurry the phase-out of one of the jinkiest budgetary gimmicks ever foisted upon the people of Virgina, the so-called “accelerated” sales tax. About time! Too bad we can’t finish the job this year.

The 2010 General Assembly required larger retailers — anyone with $1 million or more in taxable sales — to pre-pay a portion of their July 2010 sales tax remittance in June, thus collecting an extra month’s revenue with which to close the budget gap. In the 2011 session, the legislature partially rolled back this abusive and dishonest expediency by raising the sales threshold to $5.4 million, thus exempting some 7,000 merchants and decreasing revenue by $45.7 million.

McDonnell’s proposal would raise the threshold again to $26 million in sales, exempting another 1,400 dealers from the accelerated tax at a cost of roughly $50 million. “I have always opposed the policy of playing budget games with sales tax receipts,” the governor said in a press release. “The accelerated sales tax can feel to retailers like a ‘double tax.’ It penalizes Virginia retailers and merchants and skews states revenues. It is bad policy and it needs to be eliminated as quickly as we can. ”

The accelerated sales tax was the ugly, co-joined twin of the General Assembly’s decision to cut payments into the Virginia Retirement System. Both maneuvers in essence took money that didn’t rightfully belong to the state and eventually would have to be phased out at considerable cost. McDonnell is doing the right thing. It’s the very least we expect from a state that purports to be serious about maintaining its AAA credit rating, and it’s exactly the kind of thing I’m talking about when I say we need to “bullet proof” the state budget.

— JAB