CHARLESTON, W.Va. — The House of Delegates Finance Committee approved two bills Wednesday creating separate tax credits in hopes of boosting development in the natural gas industry in the Mountain State.
The first, HB 4421, called the Natural Gas Liquids Economic Development Act, would provide a credit to businesses that store or transfer natural gas. The companies would pay their inventory and equipment property tax to the county where they are operating but would be able to receive a credit in that amount against their corporate net income and personal income taxes.
Supporters, like Delegate Bill Anderson, R-Wood, said the credit would help in the efforts to attract a natural gas storage hub and an ethane cracker plant.
“We have the potential but we have to begin seriously looking at getting the hub in place somewhere in this region. Otherwise, we’re going to put all of these liquids in pipelines and we’re going to Louisiana and we’re going to send them to Texas and that’s where the jobs are going to be,” Anderson said.
The credit in the bill was limited because of concerns about the state’s current financial condition. Delegate Isaac Sponaugle, D-Pendleton, said that weakened the bill.
“Throwing $1 million at something that’s probably going to cost $50 million to $100 million to get what you want is a waste of money,” Sponaugle said. “It’s not going to drive economically development–you’re not throwing enough money at it.”
The bill passed on a voice vote Wednesday morning.
In the committee’s Wednesday afternoon meeting, it passed a second tax credit bill for natural gas. HB 4019, called the Downstream Natural Gas Manufacturing Investment Tax Credit Act of 2020.
The bill would allow eligible taxpayers to take a credit against the portion of state income taxes that come from the taxpayer’s investment in a new or expanded downstream natural gas manufacturing facility provided it creates new jobs. It’s similar to the state’s existing Economic Opportunity Tax Credit.
The credit would determined by a complicated formula that determines the percentage of new jobs created with the project. The credit will be calculated on a 10-year period. If it’s not all used it can be taken during a second 10-year period.
The approach by the leadership in the state Senate has been to phase out the inventory and equipment tax along with eliminating some personal property taxes. The House is taking the tax credit approach.
Delegate Mick Bates, D-Raleigh, said it doesn’t appear there’s much coordination between the House and Senate leadership. He said the Senate approach essentially would change the Constitution to allow the legislature to have more control over taxes.
“It’s sort of makes it wide open on what a future legislature could do in terms of how they could manage these issues in personal property taxes, real estate taxes. It says you could only lower them and not raise them. It poses all kinds of questions,” Bates said.
The House plan wouldn’t dive into the Constitution.
“It doesn’t affect the counties,” Bates said.
Anderson called the tax credit plan “perhaps a small beginning but a necessary beginning.”
Both bills approved Wednesday head to the House floor for consideration.