Northam wants to end Virginia’s grocery tax, give money back to taxpayers in budget plan

Politics

RICHMOND, Va. (WRIC)- Governor Ralph Northam wants to give money back to taxpayers and cut down grocery bills. The proposals are main components of a broader tax relief package being included in Northam’s outgoing two-year budget.

The plan shows that Northam, a Democrat, and Republican Governor-elect Glenn Youngkin share some common goals when it comes to tax policy. Northam said his proposals are more targeted towards working families as Youngkin argues Virginians deserve more comprehensive relief.

While standing in the produce section at a Richmond supermarket on Tuesday, Northam proposed eliminating the 1.5% state sales tax on groceries. The proposal wouldn’t impact an additional 1% grocery tax that serves as a key revenue source for many localities, according to Northam.

Eliminating the grocery tax was central to Youngkin’s campaign platform. Northam too ran on the proposal in 2017 but he said fiscal uncertainty early on in his term made implementing it a risky endeavor. Now, the state’s budget surplus and financial reserves are at record levels, according to Northam.

“As Americans are dealing with inflation again, these extra dollars can make a big, big difference. I want everyone to understand that we’re able to do this in Virginia because our economy is booming,” Northam said.

Despite polling suggesting the idea was popular among Virginia voters during the election, Democratic nominee and former Gov. Terry McAuliffe didn’t embrace it during his campaign.

“I’ve always said I would love to eliminate the grocery tax but every Virginia resident should understand that $600 million dollars is immediately taken out of education.,” McAuliffe said during a round table with WAVY-TV. “I’m not taking $600 million out of education.”

Asked if McAuliffe’s statement was wrong, Northam said, “We are far making up for whatever we are eliminating through the grocery tax so the school systems won’t be hurt, they won’t be gutted.”

Northam’s budget proposal, which will need to win approval in the General Assembly, notably includes a 10 percent pay raise for educators.

The Governor is also proposing a one-time tax rebate of $250 for individuals and $500 for married couples. Northam’s proposal is slightly smaller than Youngkin’s pitch to provide $600 for joint filers and $300 for individuals.

Additionally, Northam’s plan calls for an ongoing income tax cut for certain working families. Specifically, he proposed making up to 15 percent of the federal earned income tax credit (EITC) refundable for eligible families. Northam said the amount will depend on income level, marital status and family size.

The last pillar of Northam’s package would end ‘accelerated sales tax’ payments for retailers. The policy emerged from the economic collapsed in 2008 when the state began requiring certain businesses to pre-pay tax payments before they had collected the revenue.

Youngkin’s transition aid Macaulay Porter responded to Northam’s proposals in a statement on Tuesday. She noted that the Governor-elect will also push forward with plans to suspend the most recent increase in the gas tax for 12 months, double the standard deduction and cut taxes on retirement pay for veterans.

“Governor Northam’s budget proposal is a step in the right direction but does not entirely fulfill Virginians’ mandate,” Porter said. “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.”

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