Virginia Gov. Ralph Northam is proposing tax cuts that would reduce the state revenues by $2.1 billion.
Northam announced his plan to cut taxes on Tuesday in Richmond. He said it will benefit working people, particularly those who struggled during the pandemic.
“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. Virginia can help working people by eliminating the state grocery tax, providing one-time rebates, and giving a tax break to people who are working,” Northam said in a news release from the governor’s office.
Northam is proposing four tax reductions:
- Eliminating the state sales tax on groceries, which is currently 1.5%. Most states don’t tax groceries.
- Cutting the income tax for working families, the proposal would make up to 15% of the federal earned income tax credit refundable for people earning less than a certain of income at their jobs.
- One-time ‘economic growth rebates,’ to everyone who files Virginia state income taxes —$250 for individuals and $500 for married couples. The last time Virginia offered rebates was 2019, $110 for individual and $220 for married couples.
- Ending ‘accelerated sales tax’ payments for retailers, which began in 2008 and required retailers to prepay sales tax to the state before the revenue was collected.
“Virginia has been named the best state for business for three years running and we have a remarkably strong economy, but not everyone is benefiting equally,” Del. Lamont Bagby, chair of the Legislative Black Caucus, said in the news release. “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.”
In an emailed statement, Governor-elect Glenn Youngkin’s transition aide, Macaulay Porter, said: “Governor-elect Youngkin campaigned on reducing the cost of living, fully funding our law enforcement personnel, raising teacher pay, increasing HBCU funding, expanding broadband access, and eliminating the grocery tax for all Virginians as part of his Day One game plan, Virginians throughout the Commonwealth overwhelmingly embraced those ideals. Governor Northam’s budget proposal is a step in the right direction but does not entirely fulfill Virginians’ mandate.
We appreciate the Northam administration laying the foundation for these elements of the Day One game plan so that Governor-Elect Youngkin can hit the ground running on January 15th to begin executing on his key campaign promises and finish the job.”
In a separate statement, Speaker-designee Todd Gilbert said: “Now we know what it takes to get Virginia Democrats to propose cutting taxes — losing to a Republican.”
