January 2, 2023 News & Press Releases

ICYMI: Democrats Start New Year by Giving Working-Class Virginians a Raise, Cutting Grocery Tax

by Democratic Party of Virginia

RICHMOND, VA – As Virginians across the Commonwealth return to work this morning, roughly 350,000 full-time employees will be receiving a 9% raise as the Democrat-passed law raising the minimum wage to $12/hour takes effect.

Likewise, Democrats are putting more money back into the pockets of Virginians as former Governor Ralph Northam’s proposed elimination of the state grocery tax also takes effect.

Richmond Times-Dispatch: Minimum Wage Bump, Grocery Tax Cut Coming Sunday

12/30/2022, by David Ress

If you postponed a trip to the supermarket until next week, you’ll save 1.5% on your shopping list

That’s because Sunday puts an end to the 1.5% state sales tax on groceries; localities still collect their 1% share.

The state is also dropping the sales tax on certain personal hygiene products, such as menstrual products, from 2.5% to 1%.

Sunday also sees a $1-an-hour bump in the state’s minimum wage, to $12.

Cutting the grocery tax will mean the state collects roughly $7 million less in taxes this year than if the General Assembly hadn’t agreed to go along with then-Gov. Ralph Northam’s proposal to cut the state portion of the combined 2.5% state and local tax. The legislature ultimately rejected Gov. Glenn Youngkin’s push to eliminate the whole combined tax.

It won’t be a big hit to state coffers, already brimming with unexpectedly large collections from other state taxes. The state grocery tax accounts for a tiny portion of the nearly $4.9 billion in sales taxes Virginia expects to collect in fiscal 2024.

Virginia’s move to raise the minimum wage in 2020 could have a bigger impact — it amounts to a 9% increase for people now earning the $11 state minimum.

Virginia moved in 2020 to join 29 other states setting minimum wages above the current, 11-year-old federal minimum of $7.25.

The General Assembly, then with Democratic majorities, opted to phase in Virginia’s increase, to $9.50 an hour in 2021, and $11 in 2022.

If legislators agree in the 2023 session, the phased-in approach means the minimum could rise to $13.50 on Jan 1. 2025, and to $15 — a long-sought goal of labor and advocates for low-income Americans — on Jan. 1, 2026.

Virginia’s minimum is less than those in 14 states, but above all the others, except for Florida, which currently sets a $11 minimum that will rise to $12 in September.

U.S. Census surveys estimate that between 329,000 and 364,000 Virginians with full-time, full-year jobs had incomes less than $12 a hour would have produced.

Some have incomes less than either the current state minimum or the federal minimum would produce, since several types of work, such as commission-based sales, piecework, farm labor and work by people with disabilities, aren’t covered.

Usually, when the General Assembly acts, its new laws take effect on the following July 1, the start of the state fiscal year.

Laws can take effect sooner if 80% of legislators agree there’s an emergency to be addressed or, more rarely, a later date than the fiscal year start. That is a way of smoothing a path for contentious measures, like a minimum wage increase that business groups fiercely opposed.

A handful of business-oriented Democrats had balked at a faster pace to a more definite $15 minimum. The phased-in approach passed on party-line votes in a legislature that then had Democratic majorities.

But after Republicans won the House majority in 2021, a proposal from Del. Danny Marshall, R-Danville, to cap the minimum at $11 died in the House Commerce and Energy Committee, even though that committee had a GOP majority.

Another measure, to exempt small businesses employing fewer than 10 people, made it through the House, but the 12 Democrats on the 15-member Senate Commerce and Labor Committee killed that proposal.

Doing away with the state’s portion of the grocery tax won bipartisan support — even a version of Youngkin’s complete elimination of the combined tax won some Democratic support despite concerns from local governments about how it would impact their ability to pay for public services.