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Gov. Justice will not sign Senate income tax proposal

Published: Mar. 31, 2021 at 7:42 PM EDT
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CHARLESTON, W.Va. (WSAZ) - West Virginia Gov. Jim Justice said he will not sign the current House or Senate version of his proposal to eliminate the state personal income tax.

The latest amendment was passed by the Senate Finance Committee on Tuesday, and included a number of other tax increases to offset the loss of nearly $1 billion in revenue from the income tax. This version looks nothing like what the Governor first introduced during his State of the State address or the bill that passed the House on Monday.

“What we’ve managed to have happen here, is the lobbyists have ruled the day again,” Justice told WSAZ. “The lobbyists, you know, with the money they throw around and everything, they have convinced people that the coal people should not participate, the gas people should not participate, the liquor, the soft drink people should not participate and everything. That’s not the way it should be.”

Justice said in addition to those omissions, other parts included in the Senate version, written by Finance Committee Chair Sen. Eric Tarr (R-Putnam), are a non-starter. The main sticking point is the return of the food tax that was phased out from 2005 to 2013.

The Department of Revenue estimates that the average West Virginia family would pay at least an additional $150 to $200 dollars per year in just the new 2.5% food tax. They would also be forced to pay the 8.5% sales tax on other items, one of the highest sales taxes in the nation.

“If you are a high income earner, you are going to come out very ahead on the Senate plan,” Sec. Dave Hardy said after crunching the numbers. “If you are a low income household, you are going to come out behind. Over 100,000 households will lose money under the Senate plan.”

Hardy said the plan will do the most damage to West Virginia’s seniors and lowest earners, in addition to putting an additional strain on people in towns that have Home Rule and its additional 1% sales tax.

Justice said he was just as surprised by the Senate plan as Democrats in the chamber, who both got their first look at the bill just hours before it was voted on in committee. The Governor said he was upset to not be included in the discussion of this proposal after reaching out to meet with legislature leadership multiple times to discuss the effort to eliminate the income tax.

“Bless their heart, but it doesn’t do anything,” Justice said. “All the House plan really does is do one thing, it gives delegates a chance to go home and say ‘we cut your taxes, reelect us.’”

That’s a similar sentiment coming from other lawmakers who said the bill needs a lot of work to get their support. Sen. Mike Maroney (R-Marshall) was the deciding vote in getting the amended bill to pass the committee to the Senate floor. He changed his opinion to support the bill after Republican committee leaders called for a 15 minute recess following Maroney expressing his concerns with the bill. That recess lasted more than 40 minutes, and the meeting resumed with Maroney saying he would support the bill if it was amended to ensure West Virginia University would not lose any funding.

“If I voted against that bill in committee yesterday, this potential massive benefit (of eliminating the income tax), and the timing is right for West Virginia, would have been dead,” Maroney said. “So, now we still have a vehicle alive. I don’t think what came out of the Finance Committee is the end product, but I think it is extremely important to keep that vehicle alive, and to try to massage it, and get a good bill across the finish line. That’s what I would be in favor of.”

Maroney’s main concern is a double whammy of taxes hitting older West Virginians in the form of the increased sales tax and the food tax.

Justice said he is willing to work with lawmakers to find a solution that he would not veto and could pass both the House and Senate before the end of the legislative session. If not, he is exploring the option to have a Special Session this summer or sooner to get this income tax reform passed.

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