VIRGINIA BEACH — Small business owners in Virginia Beach will be pleasantly surprised when they receive their business license renewal letters in the mail at the end of the month.
Commissioner of the Revenue Phil Kellam advocated for the City Council to reduce the rate at which a business is taxed in order to operate in the city. The rate is based on how much money a company earned in the prior year, also called gross receipts.
Virginia Beach has approximately 30,000 businesses. About 75% of them are considered small businesses that bring in less than $300,000 a year.
Most of the council members didn’t want to cut the tax when Kellam first brought the proposal to them last December after he campaigned on it in the 2021 election. The City Council delayed a vote on it to consider it during the budget process, but they opted not to include it in the fiscal year 2023 budget.
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So Kellam brought his proposal back to the City Council at a meeting earlier this month.
“We missed the boat last year,” Kellam said at the Dec. 6 meeting. “I ask you not to miss the boat this year.”
He’s been pushing for the relief because the pandemic hurt small, local businesses, and now inflation is making it harder for them to compete with larger national ones, he said by phone Monday.
Mayor Bobby Dyer and Vice Mayor Rosemary Wilson again said they wanted to wait until budget planning in the spring to reconsider reducing the tax.
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But Councilman John Moss, who wanted to pass the relief measure last year, reupped his support of small businesses.
“They’ve been the most impacted by the economy and are most in need of relief,” Moss said at the meeting.
After discussing three levels of fee reductions, the council agreed on the one with the least impact on the general fund. All businesses that bring in less than $200,000 will now pay a flat rate.
In making the change, the city is giving up $1 million in tax revenue, which is shared with the schools.
Under the new plan, businesses with $25,000 or less in receipts will pay $25, instead of $40. Businesses that earn between $25,000 to $100,000 will now pay $40, a reduction of $10.
The most benefit will be felt by businesses that bring in between $100,001 and $200,000. They’ll save an average of about $400 a year by paying a flat rate of $50 instead of a percentage rate based on a business type.
Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com