CHARLESTON, W.Va. — The House of Delegates Finance Committee used a Saturday morning meeting to come up with what could be the largest revenue producing bill this legislative session.
The measure (HB2704), which passed on a voice vote, would lift the current sales tax exemption on professional services, things like lawyers, engineers, advertising sales, and then decrease the current 6 percent consumer sales tax to 5.5 percent immediately and more as the state’s revenue picture gets better.
As revenues grow the sales tax would go down below the initial drop, keeping in mind the required balance in the state’s Rainy Day Fund, which would trigger the sales tax decrease.
Broadening the tax base while cutting the tax rate could be a way to build the state’s economy, Finance Committee Vice Chair Eric Householder (R-Berkeley) said.
“We can maybe spur some economic activity that we didn’t even consider from having a lower tax rate,” Householder said.
Services currently exempt from the state sales tax that would be taxed under the bill include computer hardware and software, digital goods, advertising services, lawyers, certified public accountants, professional accounts, architects, professional engineers and veterinarians. The sales tax exemption would stay in place for food, medical services and elderly care.
Possible new revenues ranging from $50 million to $344 million were mentioned during the meeting. The state is facing a $350 million revenue hole this fiscal year with another tough budget year expected next fiscal year.
The bill in its original form was introduced by Del. Jim Morgan (D-Cabell) and called for lowering the sales tax but the committee is using that bill as a vehicle for the provisions of the new bill.
The committee agreed to call the bill the West Virginia Tax Decrease Act of 2016.
The bill will now be taken up by the full House of Delegates.