Question: What would be the revenue impact of increasing the Business, Professional, and Occupational License (BPOL) tax on financial services businesses? (Councilman Elnoubi)
Response:
If the City raised Financial Services by 10 cents (going from $0.35 to $0.45), it would generate approximately $917,000. If the City increased to the State maximum rate of $0.58, it would generate approximately $2.1 million.
The City’s current BPOL tax rate is $0.35 per $100 of gross receipts. Arlington’s is $0.36, Fairfax City’s is $0.40, Fairfax County’s is $0.19, Falls Church’s is $0.52, Loudoun County’s is $0.16, and Prince William County’s is $0.33. The average BPOL tax rate is $0.33.
The following charts show how the average and median tax bills would be impacted by increasing the rate by $0.10 and to the state maximum of $0.58 per $100.
Of the 210 Financial Services licenses, 58 report gross receipts of less than $10,000 and have no tax liability, so only 152 pay the tax. Another 26 businesses that report gross receipts between $10,000 and $100,000 pay a flat fee of $50. The top 20% of the 152 tax-paying businesses are paying 93% of the total tax for this category. The remaining 80% of the tax-paying Financial Services only pay 7% of the tax in this category.