Virginia – Taxes Imposed on Specific Localities Violates State Constitution

SALT Report 2304 – The Virginia Attorney General issued an advisory opinion regarding whether the state’s General Assembly may constitutionally impose an additional 0.7% sales tax and an additional recordation and transient occupancy tax for certain localities within the State. Specifically addressed is whether House Bill 2313 can impose different tax rates on similar transactions in different areas and if the taxes are subject to the two-thirds voting requirement.

In his response, the Attorney General stated that, although the imposition of different taxes on transactions in different localities does not itself violate Article X, §1, of the Virginia Constitution, the transportation package recently passed in H.B. 2313, but not yet signed by the Governor, does. The state’s constitution specifically prohibits the imposition of additional sales taxes on specific localities because the additional taxes constitute “a local law related to taxation” which is prohibited by Article IV, §14(5) of the Virginia Constitution. Additionally, Article X, §1, applies only to property taxes, and none of the taxes authorized by H.B. 2313 are taxes related to property; instead, they are transactional taxes such as, sales tax.

Further, the Attorney General stated that the Supreme Court of Virginia has already determined that the General Assembly’s powers are broad, but they are not unlimited. Specifically noted is Article IV,§ 14(5) of the Virginia Constitution which states that “the General Assembly is directly prohibited from enacting any local, special, or private law for the assessment and collection of taxes.”

Further, the local taxes enacted in H.B. 2313 do not fall within the protection of Article VII, §2 of the Constitution because it only deals with the General Assembly’s ability to confer powers of taxation to local governments. It does not authorize the “General Assembly to impose special local taxes on the citizens of specific localities.”

Therefore, the Attorney General stated that because the taxes were imposed directly by the General Assembly, the taxes cannot be saved even if they had received a vote of two-thirds by the members elected to each house.

For Further Information

Virginia Attorney General – Opinion No. 13-014