House Joint Resolution 526 (Appendix A), passed by the 1993 General Assembly, established a joint subcommittee to study the business, professional, and occupational license ("BPOL") tax imposed by local jurisdictions and to consider alternative means of taxation. House Joint Resolution 110 (Appendix B), passed by the 1994 General Assembly, continued the study for another year for the purpose of improving the administration of the tax.

In its deliberations during the first year, the subcommittee considered options for restructuring or replacing some or all of such taxes with alternative revenue-neutral business taxes which are fairer, easier to understand and apply, and more efficient to administer. During the second year, the joint subcommittee focused on making the administration of the tax more uniform. To achieve this goal, the subcommittee relied on an advisory committee, consisting of business and local jurisdiction representatives, and the Department of Taxation for assistance in preparing a model BPOL ordinance for use by all localities.

The BPOL tax has been a controversial tax for many years. Some in the business community think the categories of occupations are inappropriate and the tax rates unfair. A majority of those objecting to the tax agree the tax should not be levied on the gross receipts of a business. However, local jurisdictions depend substantially on the BPOL tax revenues and, therefore, will not give them up without some alternative which will provide comparable funds in order to provide required services. An equitable distribution of the financial responsibilities for those local services is of paramount concern to the localities.

In 1993, the subcommittee considered amending the current BPOL tax statute as well as repealing the statute and replacing it with one allowing a different method of taxation. In order to decide, the subcommittee met twice to hear testimony from those representing the business community as well as local jurisdictions. In addition, an advisory committee consisting of business people and local jurisdiction officials was appointed by the chairman of the joint subcommittee. The advisory committee, which also met twice, was to develop alternatives for the joint subcommittee's consideration. Realizing that eliminating the tax was impossible without an alternative revenue producer, the subcommittee focused on the administration of the BPOL tax.

In 1994, the joint subcommittee met twice, with its third and final meeting in early January, 1995. The advisory committee met five times with representatives from the Department of Taxation to develop the model ordinance, which was introduced during the 1995 General Assembly Session as House Bill 2351 (see Appendix C for annotated legislation). A resolution was also introduced which continued the study for an additional year in order to examine once again the possibility of eliminating the BPOL tax entirely (Appendix D).