Government and Citizens

Taxation

Taxation

Taxes reflect what citizens and businesses pay for their government. Government activity increases as the scale of economic activity increases, and the relative burden of a dollar in taxes depends on income levels of citizens and businesses.

Why is This Important?

Taxes fund valuable government services that would not generally be provided by the market or that are not appropriate services for the private sector. These government services help facilitate business activity and improve the quality of life of residents. Ultimately, setting local tax rates is a complicated process and involves finding a balance that suits both the needs of an area's citizens and its economy.

How is Hampton Roads Doing?

In 2007, the local per capita tax rate in the Hampton Roads region was $1,670. The tax burden (4.4), which is measured as local taxes collected relative to personal income, was close to the state's average of 4.04 percent in 2006.

What Influences Taxation?

The level of local taxes paid by an area's residents is determined by a process involving both the state and local governments. Unlike some states, Virginia state government retains significant control over both state and local taxes and has imposed maximum rates on many local taxes. Localities in Virginia can only levy taxes in those areas authorized by the General Assembly. Localities do, however, retain control over many areas of taxation including the property tax rate.