RICHMOND, Va. — Author's note: The video above is on file from March 6, 2021.
Virginia Gov. Ralph Northam proposed four changes to the state's tax policy, citing recent economic growth that will help working families.
“When Virginia cuts taxes next year, it should be done in a way that benefits working people,” Northam said.
“Many professionals made it through the pandemic fine, as their work simply moved online. But workers haven’t been so lucky when their jobs require close contact with other people. Some jobs simply can’t move online—restaurant workers, early childhood educators, home care attendants, and others—and we all depend on the people who do this work."
Here's a look at how Northam wants to change taxes in Virginia:
Eliminate the state grocery tax
Right now, the state grocery tax is currently 1.5%. Northam had initially proposed this policy change back in 2017, citing that many states already do not tax groceries and that the Commonwealth's economic standing is prepared for this change.
Cut income taxes
The second proposal is to create an up to 15% refund on federal earned income tax credits for families, which would give a tax break to low and middle-income families who are eligible based on certain criteria.
This would mean that the state would be able to refund families who are working but making below a certain amount. Northam first proposed this cut in 2019.
Give a tax rebate for Virginians
The third proposal would give a one-time economic growth rebate to residents, amounting to $250 for individuals and $500 per married couple.
End accelerated sales tax payments
This policy specifically applies to retailers. This payment policy was created after the 2008 recession and required the retailers to pre-pay sales taxes to the state before purchases by customers were even made.
How tax changes will affect the revenue
“Virginia is able to take these steps now because our sound fiscal leadership has shaped a booming economy,” said Secretary of Finance Joe Flores. “These steps are tools to make sure that working people share in the prosperity.”
According to Northam, these proposals will decrease state revenue by $2.1 billion, with most of the money coming from a one-time payment from the state's General Fund and $419 million as an ongoing payment.
“Virginia has been named the best state for business for three years running and we have a remarkably strong economy, but not everyone is benefitting equally,” said Delegate Lamont Bagby, the chair of the Legislative Black Caucus. “This tax plan focuses on Virginians who need help and who have largely not benefited from our strong economy. This is the right way to help working people and provide equity in our tax policy.”