Interim meeting hints at coming tax reform debate (The State Journal)

September 25, 2017

CHARLESTON — West Virginia lawmakers are gearing up for another try at passing tax reform in the state.

How sweeping those reforms may be appears to be something that will be open for a great deal of debate.

Several tax reform ideas were discussed on Sept. 18 at a meeting of the Legislature’s Joint Standing Committee on the Judiciary during legislative interim meetings in Charleston. Committee Chairman Sen. Charles Trump, R-Morgan, said he and co-chair Del. John Shott, R-Mercer, wanted to try to work out details of a tax reform plan before the regular legislative session begins in January.

Tax reform ideas discussed Monday included doing away with just a few tax provisions to completely overhauling the state tax system.

State Commerce Secretary Woody Thrasher said that whatever the Legislature decides to do, lawmakers should remove the inventory tax currently charged to business owners.

“We’re telling you, having (the inventory tax) in place really hurts our ability to attract industry,” Thrasher said. “We need to get rid of that tax if we want to attract industry.”

Steve Roberts, president of the West Virginia Chamber of Commerce, agreed. Roberts said inventory taxes hurt businesses in the state.

But Thrasher said the problem with doing away with inventory taxes is replacing the $250 million a year in revenue the taxes bring in. “You can’t just leave (the counties) high and dry.”

In March, Sen. Robert Karnes, R-Upshur, introduced Senate Joint Resolution 8, which would do away with inventory taxes, personal property taxes and other taxes and replace them with a broad-based consumer tax. The proposal also would allow counties to set their own tax rates to raise local revenues.

The joint resolution is among the tax reform options members of the joint Judiciary Committee are considering. Economist Mike Caryl, who wrote the tax plan members of the Senate used as a model for proposed tax reform measures during the 2017 regular legislative session, said Senate Joint Resolution 8 or a variation of it could work if local governments have enough leeway to make up for revenue losses from the changes in the state tax system.

Caryl suggested phasing in the tax changes over several years. The plan would require a constitutional amendment, so he suggested first eliminating the tax on vehicles to gain voter buy-in.

But Jonathan Adler, executive director of the West Virginia Association of Counties, said county officials are worried about what getting rid of so many tax revenue sources will do to funding for county schools and government.

“(Senate Joint Resolution 8) does hurt the counties,” Adler said, adding that the plan, if implemented, would result in a 40 percent drop in revenues for many counties.

Jeff Amburgey, director of Property Tax Administrative Services for the state Tax Department, said he was not taking a position on the joint resolution. But he did point out that the revenue streams created by the taxes the resolution suggests eliminating make up a large percentage of the state’s revenue.

Thrasher told the committee he wasn’t sure what the answer to cutting taxes and replacing revenue was. “You have to initiate changes that result in job growth,” he said.

But Thrasher said his office would work closely with Judiciary Committee members to solve the problems.

“I hope this is the beginning of a whole lot of dialogue between you and us,” Thrasher said.

Staff Writer Rusty Marks can be reached at 304-415-1480 or by email at [email protected].