HD11 - Technical Report: Impact of Changing the Basis of the BPOL Tax From Gross Receipts to Income

Executive Summary:
The Business, Professional, and Occupational License (BPOL) tax is imposed by local governments on businesses for the privilege of operating within the locality. In many areas of Virginia, the BPOL tax is a significant source of local revenue. In FY 2012, localities collected more than $680 million in BPOL taxes. For many years, certain business sectors have raised concerns about the BPOL tax, and since the 1970s the tax has been reevaluated and modified a number of times, partly in response to this opposition.

This JLARC study takes another look at the BPOL tax with a particular focus on one proposed change to the BPOL tax basis. The tax is currently assessed on gross receipts, and the study examines the implications of assessing the BPOL tax on net income instead.