Richmond, Virginia (December 16, 2004) – Republican leaders of the Virginia House of Delegates today came out united in support of tax measures impacting the state budget during the 2005 Session. Speaker of the House William J. Howell (R-Stafford), House Majority Leader H. Morgan Griffith (R-Salem), and Chairman of the House Appropriations Committee Vincent F. Callahan, Jr. (R-McLean) agreed that a priority will be the reduction of the state share of the sales tax on food and eliminating the accelerated sales tax collection on certain businesses.

“Prioritizing state spending and honoring commitments made to Virginians are integral to being good stewards of taxpayer dollars and budgeting in a fiscally responsible manner,” said Speaker Howell. “A food tax cut delivers on a promise made to Virginians and helps those in all income levels, especially low- and middle-income families. Fixing the accelerated sales tax will help retailers and small businesses across Virginia. Providing this tax relief is just one of what I expect will be a number of legislative priorities on which House and Senate Republicans agree. We look forward to working with our Senate colleagues on this and other issues important to all Virginians.”

Legislation adopted during the 2004 Session set forth the phase-out – over a three-year period beginning July 1, 2005 – of the state sales tax on food by a half-cent per year. House Republicans will support – through stand-alone legislation and/or in the budget – accomplishing that reduction ahead of schedule, effective next July 1, 2005. Elimination of the state sales tax on food will save taxpayers an estimated $156 million per year once implemented.

One of the last vestiges of the state’s budget problems is an accounting action that requires those retailers doing over $1.3 million in business to remit 90 percent of their June sales tax collections in advance of the close of the month, rather than in the month of July. This practice has resulted in some retailers sending sales tax collection to the state prior to the actual collection. When this budget-balancing measure was adopted during the 2002 Session, the General Assembly declared their intent was to begin to eliminate the practice beginning in fiscal year 2006, with total elimination of the practice by 2012. House Republicans will work with Senate Republicans – through the budget and/or through stand-alone legislation – to end this inequity for businesses. Eliminating this practice, in effect, will return to merchants their $180 million “advance” to the state when implemented.

“I believe we have a responsibility to end the practice of asking our retailers to pay sales tax in advance of their collection,” said Chairman Callahan. “As the House begins to develop its budget, we will also accelerate the phase-out of the sales tax on food, which is a priority I’ve made known for some time now.”