Proposed legislation seeks to preserve sales tax exemption on gold and silver in Virginia for another decade
Virginia – A major legislative reform being proposed in Virginia that might have a big effect on those who invest in precious metals. Supported by Delegate Amanda Batten, the 2022 “Sound Money Legislator of the Year,,” House Bill 2336 seeks to extend the current sales tax exemption on gold and silver purchases until 2032. This legislation arrives at a crucial point since the current exemption expires in June.
Virginia’s policy of exempting precious metals from state sales tax corresponds with the belief that these objects are not conventional consumer goods but investments like stocks or bonds, likewise not taxed. Often purchased in little increments, precious metals protect many Virginians against the financial impact of inflation, which disproportionately affects seniors, savers, and fixed-income residents.
Delegate Batten’s effort emphasizes several strong arguments for keeping this exception. First of all, taxing precious metals can be considered as improper since these are retained for potential resale or as investment hedges against economic volatility, not consumed in the conventional sense. Furthermore, data from studies including one done in Michigan indicates that the small revenue collected from taxing these metals does not offset the larger economic activity and state income lost when companies relocate to more tax-friendly jurisdictions.
Such a tax can have very negative implications locally. Should Virginia let the exemption to expire, buyers of precious metals may migrate to adjacent states such as Maryland, West Virginia, Tennessee, and North Carolina, all of which are no longer taxing gold and silver. This change would have an influence on Virginia’s small businesses trading in these metals as well as on the state’s income, therefore influencing its economy.
The argument on this matter is not particular to Virginia. Louisiana temporarily changed its exemption on precious metals in 2016. The negative effects were instantaneous, leading to a quick reinstatement of the exemption just one year later following the loss in general state tax income and business. For Virginia, this is an alarming lesson highlighting the possible repercussions of not extending the exemption.
Together with other supporters, the Sound Money Defense League is actively helping House Bill 2336 to be passed. They contend that keeping the sales tax exemption is a question of strategic economic planning as much as of economic efficiency and fairness.
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The result might create a major precedent for how Virginia handles the taxation of investment assets and their effect on the local economy as well as the financial well-being of its people as Virginia keeps deliberating on this legislative proposal.
