BLUEFIELD – Governor Jim Justice’s plan to gradually end income tax in the state has met opposition, particularly in relation to proposed sales tax increases to offset the loss of income.
The judiciary wants to change the state code and reduce personal income by 60 percent from January 1, 2022, with the aim of ending everything together.
However, that would mean a little over $ 1 billion a year in tax losses for the state. To make up for the loss, Justice has proposed raising about $ 900 million to make up most of the difference by increasing consumer sales tax from 6 percent to 7.9 percent and additional taxes on soft drinks, beer, tobacco, merchandise and goods are aimed at services.
The Senate version cuts some of these specific taxes, but increases the state sales tax to 8.5 percent and levies a state hotel motel tax of 4.3 percent that is combined with the local hotel motel tax and a 1 percent sales tax levied in cities would mean that the tax could rise to 19.8 percent.
While Senator Chandler Swope, R-6th District, supports the eventual abolition of income tax to bring people and businesses into the state, he’s more cautious about tax increases, particularly the hotel-motel tax.
“I firmly believe that the abolition of income tax would lead to the biggest boom in our economy than anything we have done in the past 50 years,” he said on Thursday. “However, I fear that the hotel / motel tax is likely to lead to negative growth in our region and I will do everything I can to reduce or eliminate the tax.”
The version of the bill that the House passed did not include any tax increases at all, but relied on a longitudinal approach in which income tax was phased out as government revenues grow so much that it supports the declines.
Del. Marty Gearheart, R-Mercer, recently said he is “not endorsing the governor’s bill in any way, form, or form”.
In addition to increasing the state barrel tax on beer, the proposal would increase taxes on things like legal services and tax services and even haircuts. Haircuts are currently not taxed in the state, he said.
Gearheart said that tax redistribution “for me is not a tax cut”.
Bluefield Mayor Ron Martin, who also co-owns the Grants Supermarket stores, is also against it.
“The problem is it’s not the sales tax at the checkout,” he said. “It is taxed when it comes in the door.”
That means the company pays the additional tax up front and then has to pass it on to consumers by adding to the cost of the product.
“A six-pack of cola would cost 36 cents more,” he said of the 6 cents per bottle tax. “Customers pay attention. My price won’t be competitive … (with stores in Virginia). “
Other tax hikes in the past, like this gasoline tax, harm the border counties, he said, and this is no exception.
But Swope said he wanted some protection for the border districts.
A final plan will likely include parts of all plans and will certainly take into account the cross-border issues, ”he said recently. “I am confident that a final plan can be achieved. If so, it will trigger the greatest economic development in West Virginia’s history. “
Part of the judiciary’s plan to offset the cost of the tax’s abolition is to get more people moving into the state to take advantage of the non-income tax, which is contributing to a boom.
But many disagree, including Mercer County Commissioner Greg Puckett, who is also against the plan.
Puckett said most other states that have gone this route have not seen such population growth, and one state, Kansas, has actually had to repay personal income tax.
He also said that the increase in taxes would cost consumers more on the daily cost of living and they are already struggling to pay the bills.
Gaylene Miller, AARP state director in West Virginia, released a statement Tuesday against the plan.
“As West Virginia lawmakers consider major reforms to the state’s tax structure, the AARP urges heads of state and lawmakers to reflect on the unintended consequences for more than 50 West Virgins, a major economic engine in the mountain state, as well as other hardworking individuals and families” , she said.
“The latest research does not show a clear positive association between lowering income taxes and economic growth, and recommends balanced and broadly applied progressive taxation using a combination of income, sales and property taxes to ensure that West Virginia can generate sufficient income to deliver the essentials services. Experiences from other countries offer a real cautionary story: no measurable economic impact, but failure to deliver essential basic services that elderly western Virgins depend on. Initiatives to maintain decent income as part of tax reform efforts should not rest on the backs of the West Virgins, who can least afford it. “
– Contact Charles Boothe at firstname.lastname@example.org.