If you were to collect your grocery receipts from the past two years, they would tell a simple yet distressing story about the current state of our economy: Prices are skyrocketing and making it harder for families to make ends meet. According to a CNBC report, the price of consumer goods is up 13% since 2021, while food and grocery prices are up nearly 20%.
As inflationary pressures erode the purchasing power of Virginians, individuals are forced to make difficult decisions to preserve their financial well-being. This includes pausing long-term investments, decreasing discretionary spending, and — in many cases — foregoing critical needs. To make matters worse, rampant inflation has been met with climbing interest rates from the federal government, making it nearly impossible for many families to purchase a house or a car.
Meanwhile, small businesses are also negatively impacted. Higher costs of materials and transportation diminish profits, impede growth and create uncertainty for the future. Additionally, when families must make the difficult decision to spend less on goods and services, businesses see less revenue. Reduced revenue while struggling with inflated expenses is a heavy burden on our small businesses, creating a dismal economic climate for Virginia.
While the Virginia General Assembly cannot directly control the rate of inflation, we have the means to help Virginians lower costs.
Earlier this year, every House Republican voted to do just that by passing legislation (House Bill 2138 & House Bill 2319, McNamara) that would provide more than $1 billion in tax relief over the next two years. Currently, 86% of taxpaying Virginians are in the top tax rate and would see their rate reduced. The plan would also raise the standard deduction to reduce taxable income, and an additional 14,000 Virginians would pay no state income taxes at all. Further, this would have lowered the corporate tax rate to keep Virginia businesses competitive with neighboring states and help them build capital to make critical hires.
I have also voted to eliminate the grocery tax and support efforts to lower electric bills. But as a legislature, we must do everything we can to lower costs for Virginia families. We must lower the burden of state income taxation.
A critical budget negotiation is underway in the General Assembly that will determine the long-term fate of the proposed corporate and income tax cuts. Unfortunately, these tax cuts have been hindered thanks to partisan bickering.
It’s time we put Virginia families first.
I implore my colleagues on the other side of the aisle to reconsider their position. In addition to the immediate financial benefits for families, tax relief can also inject much-needed liquidity back into the economy. Putting more money back in the hands of taxpayers can ease the burden of inflation, so consumers are empowered to spend more and support local businesses. This would not only bolster economic resilience, but also promote job creation and employment opportunities for years to come.
The end result will be a mutually beneficial system that enables families and businesses to flourish in Virginia.
Ultimately, tax relief can initiate the domino effect needed to combat inflation and generate economic development. I am proud to have worked with Gov. Glenn Youngkin to pass meaningful relief to lower electric bills and cut the grocery tax, and I am ready to get to work on cutting income taxes on Virginians.
Del. Karen Greenhalgh represents the 85th House District, which includes part of Virginia Beach. She serves on the House Finance Committee and the Small Business Commission.
