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The Intelligencer Editorial: HB 2704 – West Virginians, state’s economy would suffer

From The Intelligencer of Wheeling:
The very last thing West Virginians, including small businesses that drive our economy, need is higher taxes. Yet some state legislators are planning a tax increase of historic proportions — and are attempting to disguise it as tax relief.
That would be taking the easy way out of the state’s severe budget crisis. Easy for legislators and for the bureaucrats in Charleston, that is.
But for the rest of us, paying as much as a third of a billion dollars more in taxes every year would be hard. For some small businesses, it could be the straw that breaks the camel’s back — forcing them to close their doors and lay off employees.
Here is what happened: On Saturday, a tax bill in the House of Delegates was amended drastically. The measure, HB 2704, now calls for the state sales tax rate to go down by half a point from the current 6 percent. That is the carrot proponents of the bill hope will prompt other lawmakers to vote for the bill.
But it has a very sharp stick, too: If HB 2704 becomes law, the professional services exemption to sales taxes would be virtually eliminated. West Virginians would have to pay  sales taxes on a variety of services — everything from getting one’s hair done to having Rover treated at the veterinarian’s office.
That would make it more difficult for small businesses to attract and retain customers, of course. They would have to increase prices to cover the new tax.
At the same time, many would be hit by a double-whammy: They would have to pay the tax, too. Small businesses paying for custodial work, accounting help, lawyers and other professional services would be charged the tax.
Estimates of how much the tax would bring in to state coffers vary. The lowest estimate we have seen is $200 million a year — but it comes from lawmakers eager to enact the change. Another projection, of $344 million a year, is more likely to be accurate.
That would make legislators’ jobs much easier as they begin addressing the budget shortfall, expected to be in the $460 million range for next year.
By using the new tax revenue and taking $100 million or so from the state Rainy Day fund, lawmakers could avoid most cuts in state spending. That would make the Legislature very popular among those in state agencies.
West Virginians and the state’s economy would suffer. State government would be preserved on our backs.
There must be a better way.

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