On Friday, committee members approved Senate Bill 409, which increases the state’s sales tax and eliminates some exemptions to it.
The measure also restores a sales tax on groceries that hasn’t been in effect since 2013.
Senate Bill 409 will advance to the Senate Finance Committee for consideration.
The bill has some provisions similar to another tax reform bill, Senate Bill 335, the 2017 Tax Reform Act, which has not advanced since Monday.
A fiscal note, which explains the estimated costs of legislation, was not available for SB 409 Friday, and committee members did not receive any information regarding how much revenue is expected to be generated or lost by the proposal.
In its current form, SB 409 increases West Virginia’s sales tax from 6 percent to 7 percent, Michael Caryl, a tax attorney and adviser to the committee, said during a meeting Friday.
Caryl said the bill provides for that increased sales tax rate to be charged for certain services that currently are exempt: newspaper delivery, funeral and embalming services, hair and skin care services, non-medical personal care, telecommunications services, solid waste disposal, electronic data processing, educational summer camp tuition, health and fitness club memberships, transportation, music instruction, artistic performance admissions and travel agency fees.
The bill also restores a sales tax of 3.5 percent on groceries. Currently there is no sales tax on food.
Also in SB 409 is a measure to change the state’s income tax structure with a means of potentially phasing it out altogether.
The proposed income tax structure would tax $20,000 in income at 1.65 percent, and people making between $20,000 and $35,000 would be taxed at 3.3 percent, Caryl said. Anyone making $35,000 or more would have an income tax rate of 5 percent.
The income tax phase-out plan provides that for every $50 million in revenue past $1.8 billion brought in from the sales tax, the income tax will drop .1 percent at each level, meaning the income tax on the lowest earners would be the first to be phased out.
So, in real numbers, the state would have to generate $1.85 billion in revenue from the sales tax in order for the income tax decrease to kick in.