Senate panel amends tax break bill for businesses

RICHMOND — A Senate committee revised Del. Kathy Byron’s corporate tax-break bill and then approved it Tuesday.

The Senate Finance committee added a requirement that companies availing themselves of the tax break be required to maintain or increase the number of jobs they provide.

It also delayed the bill’s effectiveness until 2011, one year longer than Byron proposed.

Byron, R-Campbell County, didn’t oppose the amendment offered by Sen. Richard Saslaw, D-Springfield, who said the one-year delay would protect the state treasury from yet another revenue downturn.

“This is a more conservative approach that Senator Saslaw is presenting,” Byron told the committee. “It is basically a safeguard that is being put in place for the commonwealth.”

The bill is intended to make Virginia more attractive to multi-national companies when they look for a site to relocate or consolidate their businesses. It could affect about 170 existing companies, according to a study by the state’s tax department.

Byron said 22 other states have become more competitive by offering the tax break, which is called a “single sales factor.”

One of the measure’s major supporters last year was Barr Laboratories, which has since been purchased by Teva Pharmaceuticals. A Teva spokeswoman said Tuesday the company liked most of the amended bill, except for a penalty it would impose if the company’s number of jobs declined. Teva employs more than 550 people at its facility in Forest.

Byron’s proposal would allow corporations to choose to pay their taxes based on sales, rather than the value of new plants and equipment. The tax-department study said the bill could reduce state revenues by up to $55 million the first year, as it was being phased in over a three-year period.

Several companies’ lobbyists spoke in favor of the measure.

Brett Vassey, spokesman for the Virginia Association of Manufacturers, told the committee the net effect of such a tax break would stimulate the economy.

Based on trends noted in other states, Vassey said, the state would enjoy a net increase of $75 million in tax collections after a three-year introductory period.

Business taxes, individual taxes, and sales taxes could be expected to yield more revenues because of new companies in the state, Vassey said.

“As we come out of this economy, this is going to incentivize those companies that are multinational to consolidate in the commonwealth. That is the ultimate goal,” Vassey said.

The Virginia Interfaith Center for Public Policy, which had opposed earlier versions of Byron’s bill, said the amendment was appropriate.

Michael Cassidy, the center’s spokesman, said Saslaw’s change would “preserve manufacturing jobs,” although the bill still would be costly in terms of lost revenues.

Cassidy cited statistics that he said showed only three states have increased their number of manufacturing jobs in recent years “and none is a single-sales-factor state.”