Calling a summit: Justice plans meeting with Senate, House to iron out tax plan

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Charles Boothe, Bluefield Daily Telegraph, W.Va.
·5 min read
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Apr. 3—CHARLESTON — Gov. Jim Justice has called a special summit at noon on Monday with Senate and House leadership to try to iron out differences in his proposed plan to eventually eliminate the personal income tax.

"We are going to have a summit on the most important thing that has come across ... West Virginia in forever," he said during his pandemic briefing Friday, which was primarily about the tax plan. "We need to merge three plans or come up with another concept and get this thing across the finish line."

Those three plans include different ways to handle the gradual elimination of the personal income tax, focusing mainly on raising taxes in other areas to offset the loss of revenue.

In Justice's plan, 60 percent of the income tax would end starting July 1,2022, with a loss during the following fiscal year of more than $1 billion to the state. He wants a variety of tax increases to raise more than $900,000 to help make up for the lost revenue.

His plan includes increasing the consumer sales tax from 6 percent to 7.9 percent along with targeting extra taxes on soft drinks, beer, tobacco products, among other products and services.

The Senate version raises the state sales tax to 8.5 percent, imposes a hotel-motel tax of 4.3 percent and sets a tax on food, a tax that was eliminated in 2013 because it was considered regressive. It does not include a sales tax increase on alcoholic beverages or soda, but does include the tax hike on tobacco and vape products.

In the House version, no tax increases at all are included as it relies on a longitudinal approach, gradually eliminating the personal income tax as state revenues grow enough to support the decreases.

On Friday, Justice said whichever version advances needs to be fair.

"It is mandatory that we do not lay this burden on one sector in order to benefit another," he said of the tax increases. "We need to spread this around to where we have the ability to make everybody cash positive."

Justice was referring to his plan to put enough money in people's pockets by gradually ending the personal income tax to more than make up for the extra money they will spend because of tax hikes.

When the income tax is completely gone, he said, it will put about $2,400 more expendable income into the average household.

Justice also maintains eliminating the tax will make it more attractive for people and businesses to move into the state, a conjecture that has received considerable skepticism.

"Let's quit messing around, let's bring all the leaders together..." he said. "I am perfectly willing to compromise."

Justice hinted he could come down from a 60 percent initial reduction in the tax to 50 percent as well as adjust the alcoholic beverage tax a "little bit," which is "out of kilter" in his plan.

But he is against the food tax, which, he said, "we do not need."

Coal and gas companies are also facing extra fees, he said, adding that everybody should "play a part in this."

Some local legislators, including state Sen. Chandler Swope, R-6th District, support eliminating the tax, and Swope said he understands some tax hikes are necessary to offset the revenue loss to the state.

But he wants border counties protected to a degree.

Any tax hikes on products can prompt people to cross state lines to purchase products, as they did with the hike in the gasoline taxes over the years.

"I very strongly believe that elimination of personal income tax would result in the largest boom in our economy than anything we have done in the last 50 years," he said Thursday. "However, I fear that the hotel/motel tax is likely to result in negative growth in our area and will do what I can to have the tax reduced or eliminated."

A final plan will probably include parts of all the plans and will consider the cross-border issues, he said. "I'm hopeful a final plan can be achieved. If so, it will trigger the biggest economic development in the history of West Virginia."

However, Del. Marty Gearheart, R-Mercer, is opposed to any plan that raises taxes and said recently he does not "favor the Governor's bill in any way, shape or form."

Organizations like the AARP and chambers of commerce around the state also oppose the plan.

Jeff Disibbio, president and CEO of the Chamber of Commerce of the Two Virginias, said recently the area should not be burdened with something that will not help.

"The Chamber of Commerce of the Two Virginias is an advocate for any opportunity to expand business in our area," he said. "However, it must be done in a way that makes financial sense. If we can find a solution that entices an influx of business and citizens without being overly burdensome on our citizens and businesses then we would champion that opportunity."

Competitiveness must be maintained with any legislative move, he added.

"It is imperative that we structure it in such a way as to not place our border county businesses at a competitive disadvantage with surrounding states," Disibbio said. "A sales tax that is comparable to others around us would be ideal in that it would give businesses equal footing and allow the market forces to let the consumer choose where they spend their money."

The summit will be held at noon on Monday and Justice said some members of the media would be invited to attend.

"I don't hide behind closed doors," he said.

— Contact Charles Boothe at cboothe@bdtonline.com