BLUEFIELD – An initiative by Governor Jim Justice to phase out income tax and increase sales tax to make up for the loss is not being received with open arms locally.
House Bill 2027 would change the state code and cut personal income by 60 percent starting January 1, 2022, with the goal of ending it all 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 through the bill to raise around $ 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 and Tobacco products are sought. and in other areas.
For example, a 6 cent tax would be added to a 16.9 ounce. Sparkling water.
“The problem is, it’s not the sales tax at the cash register,” said Ron Martin, co-owner of Grant’s Supermarket chain. “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 the gasoline tax, harm the border counties, he said, and this is no exception.
The main purpose of the judiciary for the bill is to make the state more attractive to people, to move here and take advantage of the non-payment of state income tax. He said the state’s population could increase by 20 percent.
However, Martin is skeptical, saying that the nine states that now have no state income tax have not seen such population growth.
“Kansas was the last state to do this and they had to go back to where they were,” he said. “I don’t know why this is high on his priority list or what he thinks West Virginia will be. It’s no different from the others (who saw no benefit). “
Martin said he hopes the bill will go nowhere and “die a quick death”.
Jeff Disibbio, president and CEO of the Chamber of Commerce of the Two Virginias, said the area shouldn’t be burdened with anything that won’t help.
“The Chamber of Commerce of the Two Virginias is an advocate of any opportunity to do business in our area,” he said. “However, it has to be done in a way that makes financial sense. If we can find a solution that will stimulate an influx of businesses and citizens without placing undue burdens on our citizens and businesses, we would embrace this opportunity. “
Competitiveness must be maintained with every legislative step, he added.
“We absolutely have to structure it in such a way that our border district businesses are not put at a disadvantage in competition with the surrounding states,” said Disibbio. “A sales tax comparable to others around us would be ideal in that it gives businesses the same footing and allows market forces to let consumers choose where to spend their money.”
State Senator Chandler Swope, District R-6, said he supported a plan that will ultimately end personal wealth tax, but the impact on cross-border counties should be considered and a final plan has not yet been selected.
He is also convinced that more people will move into the state with this tax.
“I strongly support a plan to eliminate income tax,” he said. “The nine states that have no income tax have the highest growth rates in the nation. People are moving to these states in droves. For example, Hertz Rental reports that the state with the highest number of one-way rentals is Tennessee – an income tax-free state. “
Swope said West Virginia was halfway between New England and Florida or Tennessee.
“People are moving into these states en masse and driving through or past West Virginia to get there,” he said.
A VAT increase was necessary to compensate for the lost revenue, but could be done with caution, he said.
“Of course, other taxes like sales tax need to be increased to offset some of the income tax cuts,” he said. “This will lead to cross-border sales in some areas. There are studies that generally show that the cross-border effect will offset itself with minimal impact on government GDP. “
Swope said three models of personal income tax elimination plans are included in the governor’s plan.
“A final plan will likely include parts of all the plans and will certainly take into account the cross-border issues,” he said. “I am confident that a final plan can be achieved. If so, it will trigger the greatest economic development in West Virginia’s history. “
But Del. Marty Gearheart (R-Mercer) said he was “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”.
The excise tax on a 31-gallon barrel is currently $ 5.50, but Justice’s plan would increase that to $ 29.25.
Matt Barnett, owner of Princeton’s Sophisticated Hound Brewing Company, said in a recent story the move would hurt.
“The way it goes, this bill will cripple the West Virginia craft beer industry,” said Barnett. “Essentially, every time they take money from one area, they have to take it from another. The bottom line is that the consumer has to pay more for beer because we have to raise our prices. “
House Bill 2027 is now on the House Finance Committee.
– Contact Charles Boothe at [email protected]