By David Beard
CHARLESTON. W.Va. — The Legislature will take a different approach to tax reform this year, various leaders said during Friday’s West Virginia Press Association Legislative Lookahead.
The tug-of-war over proposals last year contributed to the months-long special session that produced a budget just before the fiscal year deadline.
This session — which begins Jan. 10 — the primary focus will be reducing the business inventory tax, House Finance Chairman Eric Nelson, R-Kanawha, said during a morning session on tax reform. “That will be our bi
g issue this year.”
Sen. Ed Gaunch, R-Kanawha, called the business inventory tax “the most onerous tax when it comes to business development.”
It’s been recognized for at least 30 years that the tax on business equipment and inventory is a major hindrance to growth, they said.
House Speaker Tim Armstead, R-Kanawha, agreed during a later panel. The state tried various maneuvers in the past, he said, to help some businesses get around the tax, such as buying equipment and leasing it back to the company.
The problem, all acknowledged, is that the money from this tax supports schools and counties, and they don’t want to suddenly pull the rug from under them, as Armstead phrased it.
So, their idea, he said, is to eliminate a portion each year for seven years. It may not be totally gone by 2025, but “at least we’ll be moving in the right direction with this.”
Armstead didn’t mention numbers, but Nelson and Gaunch said during the earlier session that they’re looking at reducing it by $20 million per year, for a total $140 million.
With last year’s struggle to fill a $500 million budget hole a thing of the past and this year’s budget in turnaround — December general revenue collections were $16.8 million above estimates and year-to-date collections $2.66 million above estimates — Armstead said they think they can absorb the cost by finding spending efficiencies, without new tax hikes.
Delegates Brent Boggs, D-Braxton and Minority Finance chairman, and Mick Bates, D-Raleigh, both cautioned that it’s important to make sure replacement revenue is lined up so the counties and schools don’t suffer.
“We have to be careful to avoid punching additional holes in the boat,” Bates said. …
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