(Richmond, VA, USA – January 10, 2022) – Virginia currently exempts precious metals from state sales tax, however this exemption is set to expire in 2023. Members of both chambers in the Old Dominion hope to extend this popular exemption.
There are several pro-sound money measures we're tracking in Virginia. Introduced by Delegate Batten (96-R), House Bill 936 would eliminate sales taxes on precious metals as well as eliminate the $1000 threshold that currently exists in VA. In addition, introduced by Delegate Ware (65-R) and Senator Ruff (15-R) respectively, House Bill 3 and Senate Bill 26 would maintain current law by extending the existing sales tax exemption on the purchases of precious metals purchases.
If any of these measures are not enacted, and this exemption is therefore allowed to expire, Virginia small businesses would immediately be harmed – along with Virginia citizens seeking to protect their savings against the devaluation of the dollar.
The Virginia sales tax exemption on the monetary metals should be maintained for a few reasons:
- Levying sales taxes on precious metals is inappropriate. Sales taxes are typically levied on final consumer goods. Computers, shirts, and shoes carry sales taxes because the consumer is "consuming" the good. Precious metals are inherently held for resale, not "consumption," making the application of sales taxes on precious metals inappropriate.
- Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of one study involving Michigan show that any sales tax proceeds a state collects on precious metals are likely surpassed by the state revenue lost from conventions, businesses, and economic activity that are driven out of the state.
The harm is exacerbated when you consider that many of Virginia’s neighbors (Maryland, West Virginia, and North Carolina) have already stopped taxing gold and silver. Kentucky and Tennessee are two of the several states considering their own sales tax exemptions for precious metals this year.
- Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to neighboring states, such as Maryland, West Virginia, and North Carolina (which have eliminated or reduced sales tax on precious metals), thereby undermining Virginia jobs. Levying sales tax on precious metals harms in-state businesses who will lose business to out-of-state precious metals dealers. Investors in Richmond can easily avoid paying $195 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar.
In total, 42 states (including Virginia) have reduced or eliminated sales tax on the monetary metals. Five more states are considering eliminating the tax this year.
- Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. Virginia does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.
- Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren't fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us, including pensioners, Virginians on fixed incomes, wage earners, savers, and more.
In 2016, the state of Louisiana experimented briefly with slapping sales taxes on precious metals purchases. The state quickly reversed course only one year later -- and reinstated the exemption on precious metals -- because businesses, coin conventions, and state tax revenues were leaving the state.
The Sound Money Defense League strongly supports and is actively working with lawmakers in Virginia to ensure passage of this important measure. Kentucky, Mississippi, Hawaii, and Alabama are just a few of the other states fighting their own sound money battles in 2022.