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Warner Touts Tax Plan

Northern Virginians could end up paying more, warn local lawmakers.

Janet Schadle, of Vienna, has been to the Italian Cafe in Falls Church several times to savor the eggplant parmesan, but on Wednesday she got an extra serving of Gov. Mark Warner (D).

Warner used the family restaurant as a backdrop as he breezed through Northern Virginia as part of a whirlwind trip last week to promote his tax restructuring plan.

"Over the last five years alone, there's been three separate independent commissions that have all said our tax system in Virginia is antiquated, out of date and basically broke," he said.

"I think it's workable," said Schadle, who had read the governor's plan the day before. "You have to pay for it somehow."

<b>WARNER'S PLAN</b> would increase the state sales tax by one cent, charge sales taxes on Internet sales and would reduce the sales tax on food by one cent next year and an additional half cent starting in 2005. It would increase the state cigarette tax to 25 cents a pack and allow localities to raise their own cigarette taxes up to 50 cents per pack by 2006.

The governor also promised to completely phase out the car tax and abolish the estate tax for family businesses and working farms. Corporate tax loopholes that allow Virginia businesses to register in tax-free Delaware would be closed and people who turn 65 after Jan. 1, 2005 will get an age deduction based on their income as opposed to the blanket age deduction currently on the books.

"These are the kinds of things that as just plain fairness we need to do," Warner said.

One of the more controversial proposals calls for creating a separate income tax bracket for filers with income over $100,000 a year. Those taxpayers would be taxed 6.25 percent on their total income as opposed to 5.75 percent levied on taxpayers earning between $20,000 and $100,000.

The new tax rate would still "put us lower than the national average," said Warner. Overall, he said, other tax breaks would offset the impact of the higher tax rate for some wealthier Virginians. And 65 percent of all taxpayers would pay less in taxes, he said.

"I call this tax relief," he said writing "65 %" in big letters on a board.

Although the higher income taxes would only affect about 8 percent of Virginians, it could raise the tax bill for 47.7 percent of Fairfax County families, whose incomes tend to be higher than elsewhere in the state.

<b>ON WEDNESDAY,</b> the guests invited to Warner's presentation had mostly positive things to say about the plan.

Tom Gittins, who owns a framing store in Falls Church, called the proposal "daring and exciting."

He called the estate tax repeal "exceptional."

Schadle, who listened to Warner's speech after she finished her lunch said she was eager to see some of the revenue generated by this plan could be used for health care.

"I came from Pennsylvania where we pay 6.5 percent sales tax," said Schadle, a nurse and the mother of a 20-year-old special education student.

Despite the roughly $500 million a year expected to come from Warner's tax plan, the state will still face a budget shortfall next year, the governor warned.

Warner said the plan would help the state claw its way out of a $1.2 billion shortfall but would not provide for any new programs.

"If you think the cuts have been bad so far you haven't seen anything yet," he said.