A study conducted by the state of Virginia showed that the tax revenues earned from sales generated by fireworks products in Western part have been lower compared to the figures before. Though there are many businesses processing their application for a Virginia Tax ID, the industry seems to be faced with a bit of a challenge.
The Tax Department of the state of Virginia published a report which was sent to the Legislature claiming that the sales of fireworks products from 2017 resulted to $710,000 which is payment for the safety fee of 12 per cent and the sales tax collections is about $355,000. The total of the two taxes only came to over $1 million and this is considerably lower compared to the yearly revenue which used to reach an average of $2.8 million since the bill was approved two years ago.
One of the main contributing factors to the reduction of the revenue in fireworks sales is the safety fee that the business retailers have to pay. The report states that the neighboring states such as Kentucky and Ohio are also charging the businesses sales taxes for selling fireworks products but there is no additional charge which is referred to as the safety fee.
According to the report, another reason is that Ohio and Kentucky have already established their domain thus they have loyal customers and their businesses locations were already known in these two states. This is different from West Virginia where the sales setups are only temporary.
The state said that 75 per cent of the safety fee is allotted for the veterans who are housed in nursing facilities while the remaining 25 per cent is given to the people who are volunteering at the fire departments. The legislation was actually approved because of its merit which is the safety fee.
The report also states that because of the recent trends, it is not likely that they will see an increase in the proceeds received from the safety fee. Before the law was approved, novelty fireworks are the only products allowed but since then application for a Virginia tax ID has ballooned especially for businesses willing to delve in the fireworks industry.