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W.Va. Senate committee passes bill raising sales tax to near highest in US

The bill guts the version that was sent from the House of Delegates on Monday
Published: Mar. 30, 2021 at 4:49 PM EDT
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CHARLESTON, W.Va. (WSAZ) – A West Virginia Senate committee on Tuesday passed a bill that would raise a number of taxes, including increasing the sales tax to one of the highest rates in the nation.

24 hours earlier, the West Virginia House passed a bill that aimed to reduce the state’s personal income tax, but added no new taxes to cover the budget gap.

The Senate Finance Committee passed an amended version of the bill by a vote of 9-8 Tuesday evening that looks nothing like the version of House Bill 3300 that passed the House and was sent to the Senate on Monday.

The House version of the bill would reduce the income tax by $150 million annually until personal income taxes are eliminated. This would take at least 12 years to get the tax rate down to zero. It would create a special fund to use other income sources, like lottery proceeds, to fill any budget shortfalls and speed up the elimination process.

The Senate version of the bill would eliminate the income tax in around four years, with the income tax being cut in half for most West Virginians starting next year. It creates a number of new taxes and raises current taxes to cover the more than $1 billion hole in the budget.

“What this does, is there are 36 million people who travel through West Virginia in a year,” said Senate Finance Committee Chair Sen. Eric Tarr (R-Putnam) who wrote the bill. “Those people stop at our stores, they stop at our hotels, they stop at our gas stations, they stop at our recreational facilities. Those people from out of state, they come in and they spend money on the things that this swaps out. So, it takes the pressure density off of the person who works and lives in West Virginia on carrying nearly half of our state’s budget.”

Those increases are highlighted by raising the sales tax to one of the highest rates in the nation, from 6% currently to 8.5% next year. The sales tax exemption will also be eliminated for downloaded digital products, advertising sales, lottery tickets, computer equipment and data processing and health club memberships.

A new 3% tax will be created on certain professional services including legal, engineering, architecture and accounting. The tax on hotels will now have an added fee of 4.3% and the tax on cigarettes and other tobacco products will go up around $1 per pack.

The food tax on groceries would be reinstated at a 2.5% rate, while prepared foods and restaurants would be taxed at the 8.5% sales tax rate. Soft drinks will be taxed under either the sales tax or food tax depending on where they are purchased.

If legalized federally, recreational marijuana would be taxed. It would be regulated the same way as tobacco and alcohol. Medical marijuana would be considered separate from recreational use regarding taxation.

“You go to pick up some food, you are going to be paying 8.5 percent on that,” Senate Minority Leader Stephen Baldwin (D-Greenbrier) said after voting against the amendment at the committee meeting. “We’re trying to attract people to come visit here and stay here, and I don’t see how these tax increases do that.”

Sen. Tarr said the elimination of personal income tax, which makes up about 43% of the state’s budget, would equate to about $1 billion. These tax increased would create around $900 million in new revenue. The state’s budget increases about $100 million yearly, and state leaders said tourism and projected population growth would help make up the shortfall.

Gov. Jim Justice, who proposed repealing personal income tax during his State of the State address earlier this year, has been holding virtual town halls to promote the initiative. Both the House and Senate’s version of the bill are quite different from his original proposal.

Votes Tuesday were as follows:

Senator Tarr = YEA (R)

Senator Sypolt = YEA (R)

Senator Baldwin = NAY (D)

Senator Boley = YEA (R)

Senator Clements = YEA (R)

Senator Hamilton = YEA (R)

Senator Ihlenfeld = NAY (D)

Senator Jeffries = NAY (D)

Senator Maroney = YEA (R)

Senator Martin = NAY (R)

Senator Nelson = NAY (R)

Senator Plymale = NAY (D)

Senator Roberts = YEA (R)

Senator Stollings = NAY (D)

Senator Swope = YEA (R)

Senator Takubo = YEA (R)

Senator Unger = NAY (D)

For a breakdown of the bill click here.

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