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Council to give break on BPOL

Thursday, July 24, 2014

By MICKEY POWELL - Bulletin Staff Writer

Two measures that Martinsville City Council plans to implement are aimed at saving small businesses money as well as attracting more such businesses to the city.

In April, the council voted unanimously to implement a measure that will keep businesses with gross receipts of $100,000 or less in a year from paying Business, Professional and Occupational License (BPOL) taxes.

Such firms account for 66 percent of businesses in the city. A little more than half of those firms are businesses with less than $10,000 in receipts, according to Martinsville Commissioner of the Revenue Ruth Easley.

The city has 1,152 business license accounts. Of those, 764 are businesses with annual gross receipts of $100,000 or less and 388 are firms with gross receipts of less than $10,000, Easley said.

At her suggestion, the council on Tuesday voted unanimously to implement another measure that will keep businesses with gross receipts of $10,000 or less annually from having to pay a minimum $30 license fee.

The council soon will have to adopt an ordinance that puts those measures into effect for calendar year 2015. Unlike most city matters that take place based on July-to-June fiscal years, BPOL is based on calendar years.

To make it clearer, Easley explained the measures this way:

All businesses still would have to do all the paperwork required for business licenses and receive the licenses. However, businesses with gross receipts of $10,000 or less would pay no fee. Those with receipts of between $10,001 and $100,000 would pay the $30 fee. Those with receipts of $100,001 or more would pay regular business license taxes, which vary depending on the type of businesses they are — contractors, service, retail or professional.

The council in April took a little more than $39,000 from the city’s reserve funds to make up for revenue to be lost by implementing the first measure.

Easley said implementing both measures will cost the city a total of about $44,000.

Asked by Mayor Kim Adkins if she thinks the measures will attract new businesses to Martinsville, Easley said yes.

“The perception is we’re running businesses out of the city,” or dissuading them from coming to Martinsville, by having higher BPOL rates than Henry County, she said.

The council had asked for information on revenue impacts for different rate change options out of interest in eventually moving Martinsville’s BPOL rates to align with the county’s, or at least to lower the city’s current rates.

Easley determined that lowering all rates to match the county’s would cost the city about $855,000 annually. She suggested the council not do that, at least not now.

Amid the city’s financial constraints, “you need the revenue” to cover costs for providing municipal services, Easley told the council.

Vice Mayor Gene Teague said the city might want to look at reducing BPOL rates over perhaps 10 years.

In the meantime, “it would be hard to argue against” the two measures planned, Easley said, because they can be begun “without greatly damaging your revenue line.”

“It makes sense,” Teague said. Adkins agreed.

 

 
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