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July 07, 2006
Governor's News Release on HB/SB 5019
GOVERNOR KAINE PROPOSES AMENDMENTS TO LAND CONSERVATION TAX CREDIT LEGISLATION
~ Praises Assembly passage of estate tax repeal ~
RICHMOND Governor Timothy M. Kaine today announced his recommended amendments to General Assembly legislation that repeals Virginia's estate tax and modifies the Commonwealth's land conservation tax credit program. The estate tax, which is levied posthumously on large estates, will be repealed on July 1, 2007.
Within the same legislation, the General Assembly agreed to cap tax credits the state allows for conservation easements, and placed limits on credits for land outside of the Chesapeake Bay watershed in Southwest and Southside Virginia. Generally, the Governor's amendments will establish a higher cap, increase accountability within the tax credit program, and remove the regional disparity in how those credits are applied.
"I applaud the General Assembly for repealing Virginia's estate tax a move I have supported for some time because it helps preserve family-owned businesses and farms. This also helps keep Virginia competitive with more than two-dozen other states that have already taken this action," Governor Kaine said.
"Our administration has set a goal of protecting 400,000 acres of Virginia fields and forests before my term ends in 2010," the Governor said. "The conservation tax credit program helps us preserve natural resources, achieve improved air and water quality, and improves the economics of farming and forestry. However, the program must be structured so that incentives are only granted for the preservation of environmentally meaningful land. In addition, for budgeting purposes, the program's fiscal impact must be predictable. The General Assembly legislation, together with my proposed amendments, balances these goals."
The legislation reduces the conservation tax credit from 50% to 40%, and directs the Virginia Department of Conservation and Recreation to review easements that will generate more than $1 million in tax credits to verify that properties have conservation value. The legislation also directs the Virginia Department of Taxation to develop guidelines for conducting appraisals on land offered for conservation in exchange for tax credits.
Governor Kaine's substitute removes the $750,000 per-transaction cap on easements granted for property located in Southwest and Southside Virginia. The substitute also changes the total annual cap on credits to $100 million, adjustable annually by the Consumer Price Index. Currently, the program lacks any annual cap.
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