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Tax secretary says flex-fuel credit costing WV revenue

CHARLESTON, W.Va. — The state’s new tax and revenue secretary says West Virginia could learn a $100-million lesson about tax credits.

“Tax credits, while they may have a purpose and function in very limited situations, generally are not a good idea for a state, particularly a state like West Virginia which has limited resources to begin with,” said Bob Kiss.

On Monday’s MetroNews “Talkline,” Kiss talked about the Alternative Fuel Motor Vehicles tax credit which is still costing the state big, even after part of it has been repealed.

In 2011, the Legislature approved allowing a credit of 35 percent of the purchase price, up to $7,500, for vehicles that used compressed natural gas, liquefied natural gas, liquefied petroleum gas or ethanol.

That legislation also extended the tax credit to those buying vehicles equipped to burn flex fuels, like ethanol and gasoline mixes. The vehicles did not have to run on those flex fuels, just be capable of doing so.

Earlier this year, the Legislature changed that part of the law because of the number of vehicles that meet the criteria while still being fueled by gasoline. The credit for flex-fuel vehicles expired on April 14.

“The good news, in terms of what I saw when I started evaluating it, is that the course going in the wrong direction was recognized and was closed and dealt with,” said Kiss. “The problem is there’s a runoff period.”

To date, the tax credit has cost West Virginia $30 million and some state financial analysts estimated it could reach $100 million as residents learn about the credit and file amended tax returns to get it.

So far, more than 90 percent of the credits claimed have been for flex-fuel vehicles.

The tax credits for vehicles that run on natural gas are still in place.





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