PROPOSED NEW VIRGINIA 'TECH TAX' SPARKS BACKLASH FROM BUSINESS COMMUNITY

Trade associations representing hundreds of companies that do business in Virginia have come out swinging against a proposal to expand the state sales tax to cover digital goods, something Republican Gov. Glenn Youngkin proposed and Democrats endorsed in their budget legislation.

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Both chambers of the legislature included the new sales tax on purchases like streaming subscriptions, cloud storage and online downloads in the two-year budget plans they passed last week. The Senate went beyond the House of Delegates in also applying it to business-to-business transactions.

In a letter sent to lawmakers beginning Tuesday, the Northern Virginia Technology Council and other business-focused lobbying and trade organizations said the General Assembly should reject the proposed “tech tax,” which budget documents from both chambers show is estimated to generate over $1 billion in revenue over the next two-year state budget. At a minimum, the letter said, if policymakers move forward with the proposal, they should broadly exempt business-to-business transactions — or companies may be forced to pass along costs to consumers or move to other states.