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Parkersburg News and Sentinel: State can’t afford HB 2704

From the Parkersburg News and Sentinel:

Changes to West Virginia House Bill 2704 sneaked in over the weekend would be devastating to West Virginia consumers and small-business owners.

Among the modifications that make the bill on “West Virginia Consumer Sales and Service Use Tax” a business-killer are: “removing reduced taxation of certain sales of mobile homes; removing exception for the imposition of tax on the value of labor relating to manufacture, sale or installation of modular dwellings; removing exemption from tax for certain professional services; removing the exception to application of tax contracting services; removing exemptions from tax for selected advertising services, certain memberships or services provided by certain health and fitness organizations, certain sales of computer hardware or software, electronic data processing services and products transferred electronically …”
In other words, any imagined benefit to consumers from a measly reduction in the state sales tax from 6 percent to 5.5 percent (a difference of 50 cents on a $100 purchase) is wiped out entirely by the increased expense to businesses, which will be passed on to consumers.
Business owners will be forced to pay another 5.5 percent tax on professional services — accountants and attorneys, for example; another 5.5 percent on any effort to increase sales through advertising; another 5.5 percent to invest in the business by improving equipment, or offering benefits such as gym memberships to employees; and another 5.5 percent on many other business-to-business transactions vital to keeping them up and running.
They will do this, while fighting to compete with larger businesses with the means to manipulate the system by seeking out those professional services in states that do not impose taxes. (An easy feat for those seeking to promote their products, as there is no state in the country that applies a sales tax to advertising.)
This has been tried before, folks. Florida gave it a go in the late 1980s, and the change proved such a disaster for businesses and consumers that it was repealed after only six months.
HB 2704 is a terrible move for West Virginia. It is bad for consumers, bad for businesses, bad for service providers and will further deplete the state’s coffers when, at best, small businesses stop paying for services they can no longer afford or, at worst, close their doors for good.
Smart lawmakers will surely recognize West Virginia simply cannot afford HB 2704.

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