CHARLESTON – A bill was reached in the Senate Wednesday night to end income tax for good, but it could be a hill too steep to climb.
The version approved by the Senate with a narrow margin of 18-16 largely mirrored Governor Jim Justice’s bill, and now the legislation will go to the House, which so far has not shown widespread support.
During a summit on the issue on Monday, Justice made some changes to his bill, including lowering the initial amount of income tax relief from 60 percent to 50 percent, abolishing taxes on alcoholic beverages, lowering the tobacco product tax, and lowering the tax Tax increase for soft drinks from 6.9 percent to 2.4 percent.
The compromise to amend the Senate increased the sales tax to 8 percent (the judiciary had asked for 7.9 percent and the Senate had initially raised it to 8.5 percent), approved a discount for residents with lower incomes, and approved the increase in the coal tax and gas tax through justice too.
Several items were removed from the first Senate amendment, including an increase in hotel / motel tax, plans to tax marijuana when legalized, and a tax on food.
The plan also provides for an increase in the tax on tobacco and vaping products, but leaves soft drinks in the general sales tax of 8 percent without the surcharge requested by the judiciary.
Part of Justice’s plan to make residents “cash positive” is to give lower-income workers an annual discount as they would see fewer savings from the personal income tax cut.
Anyone making less than $ 35,000 a year will get a discount in a scale of $ 250 for those making less than $ 10,000 to $ 50, up to $ 30,000 to $ 34,999.
Additional funds will be raised to offset the cost of the initial loss of $ 818 million in revenue in the first year of the income tax cut, which is slated to begin next year. This includes the use of budget surplus funds and surplus funds for “rainy days” others.
“I applaud the Senate in every way for stepping on the table and telling a bill that would completely change the status quo for West Virginia,” said Justice. “I am particularly pleased with the way the Senate Republicans have shown a great deal of compassion for those who are our low-paid workers. Restoring my tax credits – ensuring justice for all West Virgins – so that everyone has more money in their pockets after they are passed than they do today. I’m also excited to see our coal and gas partners who have chosen to be part of the solution, not part of the problem. This entire plan has always been about us all pulling the rope together. “
But the bill met with fierce opposition in the House, which passed a version that very gradually – over about 12 years – ends income tax without levying any tax.
Del. Eric Householder, a Republican, said Monday the house plan was taking a long-term approach to gradually pushing income tax abolition as state income surpluses can help.
“It’s (the tax hikes in both the Justice and Senate plans) is like pulling water from one side of the lake and draining it on the other,” he said.
Tax increases penalize those who earn the least, he added.
The head of household said the house plan could take longer, but it would work and is supported by 65 percent of the public.
Criticisms also included the negative impact of tax increases on border districts, where residents have the opportunity to cross state lines to buy goods and services.
The Republican Del. Marty Gearheart, District 27-Mercer County, is also opposed to the tax hike and recently said he is “not in favor of the governor’s bill in any way, form, or form.”
Democrats in the House issued a statement after the Senate version was passed.
“Republicans in the legislature have claimed for the past six years that they are eliminating fraud, waste and abuse in the state budget. They couldn’t identify it, ”the statement said. “The only way to fund this elimination (income tax) is to increase existing taxes or create new taxes. This is not a tax cut; This is a tax shift. We are against the plan that the Senate Republicans passed last night. This plan is going to hurt West Virgins … It’s a tax break for wealthy West Virgins at the expense of everyone else. It hurts small businesses. It hurts border districts. It hurts consumers … We are happy to continue the conversation about meaningful ways to reduce the tax burden for Western Virgins, but we refuse to accept a plan that simply shifts the tax burden to working Western Virgins. “
The House must approve the Senate bill before the legislation goes to the judiciary for signature.
Saturday is the last day of the regular session, so time is short.
The judiciary has said he does not want to convene a special session to try to prolong the negotiations in order to find a compromise that the House can support.