CHARLESTON, W.Va. — The state Senate has subbed out its broad-ranging tax reform proposal for a slimmed-down version, and the House of Delegates is making a push for its own effort to broaden the sales tax base and flatten the income tax.
The Senate’s Select Committee on Tax Reform today introduced its third tax reform proposal of the 60-day session. This one was a new bill, Senate Bill 409.
This version broadens the consumer sales tax and raises it from the current 6 percent up to 7 percent. It also reduces the state income tax from five brackets to three.
Earlier versions of the Senate’s tax reform bill had been criticized as steps too far, too fast. They aimed to raise the consumer sales tax to 8 percent and eliminate the state income tax.
Senator Robert Karnes, the chairman of the Select Committee on Tax Reform, said there just wasn’t enough support to try to move forward. So a whole new bill was introduced Thursday and passed out of the committee today.
“We carried that one a certain distance, and we listened to constituents, we listened to the business community and we decided there were probably enough changes that needed to be made in that that it was better to start with a fresh take,” Karnes said. “I think we’ve got a much stronger bill as a result.”
The new version has a 3.5 percent tax on groceries. West Virginia eliminated its food tax in 2013.
It also includes new taxes on various services, telecommunications and other items.
Karnes said it’s a start.
“For this year, we can accomplish some serious and important tax reform that doesn’t necessarily get us as far as we’d like to go, but it gets us started on the path,” said Karnes, R-Upshur.
Karnes concluded, “This says we’re going to take a little bit lower approach, a little bit more malleable approach, just not as big but still in the same direction.”
Meanwhile, on the House of Delegates floor this morning, Delegate Riley Moore made a speech extolling the virtues of the House’s tax reform plans, represented by two separate bills.
Moore, R-Jefferson, made reference to the Senate’s plan and acknowledged its reception has been rocky.
“The Senate meanwhile has offered their own bold initiative to replace the personal income tax with a higher statewide sales tax. But that plan has also had its drawbacks,” Moore said.
“We simply do not have the broad consumption economy needed to completely offset the personal income tax — which is the largest source of revenue in our state.”
The House’s bills, as they were originally introduced, would establish a broadened sales tax of 5.5 percent, lower than the current 6 percent, and a flat income tax rate of 5.1 percent.
“This is why, Mr. Speaker, I have added my name to two alternative tax reform plans that I believe could achieve the purpose of stimulating long-term economic growth, while avoiding many of the harmful side effects of the other ideas that have so far dominated our conversation.”
Gov. Jim Justice has been critical of the tax reform bills in the Legislature, particularly the ones earlier being considered in the Senate.