When less is more: VAR fights (and wins) for a smaller grantors tax increase

Some last-minute work by VAR has paid off: In his proposed amendments to Virginia’s transportation bill, Governor Bob McDonnell has asked that the proposed grantor’s tax increase in Northern Virginia be reduced from 25 cents per $100 to only 15 cents.

The bill passed by the General Assembly included a regional package for Planning District Commission 8, which includes a large portion of Northern Virginia. To help raise approximately $30 million for congestion relief, the bill (HB 2313) raised the grantor’s tax in the region by 25 cents per $100.

But when we looked at how the General Assembly arrived at that figure, we noticed something immediately: Its calculations were based on the average grantor taxes collected from 2007-2011 – years that include the worst part of the housing crash.

So we hired Dr. Chris Chmura, a well-known Virginia-based economist, to estimate sales data for the Northern Virginia area. Then, using those figures (ones that are more reflective of the current market), we saw that a 25-cent increase wasn’t necessary.

Working hand-in-hand with local associations whose members would be affected by the increase, we met with the governor’s office repeatedly over several weeks. We showed how the region could raise that $30 million with only a 15 cent per $100 increase in the grantors tax.

Governor McDonnell agreed, and worked our suggested change into his amended bill, which the legislature will consider.

We will now be reaching out to members of the General Assembly to make sure they understand our intentions, most notably, not to do the bill harm.

We think we’ve found a win-win scenario – one that lowers the amount of the grantor tax increase without lowering the amount of money that will flow into PDC 8 for transportation.

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
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3 Responses to When less is more: VAR fights (and wins) for a smaller grantors tax increase

  1. Greg Stiger says:

    To me, it seems odd that we will pay for new transit projects on the backs on residential homeowners who are selling-and may very well NOT get to enjoy the improvements. This whole increase seems like it was a bit of a stealth, under the radar move until it was announced. Not sure why VAR was proud to support the 350% increase, but sigh…maybe I do not understand how the “sausage gets made in Richmond”. The most unfair aspect of this is that we will penalize residential homeowners,many of whom are military and will not live here long enough to benefit at all….not sure what the connection is between SELLING a house and new transit projects. Another question-since our friends in Richmond have blessed us to tax ourselves for roads-can we expect that even LESS road money will come back to No Va from our state tax dollars? And a final observation- Ted Lerner owns the apartment complex that my family lived in for several years in the 60’s…apartments that now create much more traffic than 40 years ago, by virtue of their generous numbers of occupants.Ted has not had to contribute to any grantor’s tax-and probably never will. Why should a residential homeowner pay more in tax, because they own for less time? And-when a hotel which is owned by an LLC changes hands-by selling the LLC in its entirety, is their a Grantors Tax created? I think perhaps not…in other words-this tax asks much from homeowners, but probably very little for the real traffic creators-commercial,apartment, and office development. While a move back down a bit is certainly a plus-does this bill REALLY represent tax fairness, or is it just easier to tax people who probably will not vote again in No Va , after they have to pay? Just my thoughts…I am open to understanding what others say on this..

  2. Jeanette G Newton says:

    Greg, just a clarification, VAR supported the $.35 increase in the grantors tax as a compromise, as the tax was originally proposed at an increase of $.50 which was supported by some in the industry, believe it or not. Personally, I agree the tax is very unfair, but then again we need to consider that on election day.

  3. Tony Arko says:

    The grantors tax is a very easy target for lawmakers to latch onto since the people paying are potentially moving out of the area and will no longer vote for those legislators that want the tax. It definitely says something about the ethical fiber of those lawmakers so willing to throw this into the package.

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