Justice: Talks on tax plan compromise still ongoing

Apr. 8—CHARLESTON — Negotiations on trying to reach a compromise on a proposed plan to eliminate the personal income tax in the state are ongoing, but so far all issues have not been resolved.

"I am very pleased with what we have gotten done so far," Gov. Jim Justice said Wednesday, adding that some "rough edges" remain in the Senate's version of the plan.

He did not specify what those rough edges are, but did say he has drawn a "stake in the sand" on any possible food tax, which he opposes but was included in the Senate plan as a way to help offset the loss of revenue if the income tax ends.

Three plans have been advanced, from Justice, the Senate and House, but a summit with leaders from both houses on Monday did not produce a compromise.

Time is of the essence because this legislative session ends at midnight on Saturday and the Governor has indicated he does not want to call a special session on the issue.

Justice offered compromises to this plan during the summit, including reducing the initial amount of personal income tax reduction from 60 percent to 50 percent, taking out the taxes on alcoholic beverages, lowering the tax on tobacco products and lowering the tax increase on soft drinks from an extra 6.9 percent to 2.4 percent.

With the 50 percent cut, about $900 million a year would be lost in tax revenue and most of that would be made up in tax increases and other fee hikes.

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 also 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 revenues grow enough to support the decreases.

Justice has maintained ending the personal income tax would bring people, new businesses and jobs into the state.

"Our population is going down," he said. "We really want to have economic development."

But which taxes will be raised and by how much has created some sticking points, as well as how tax increases on products adversely impact border counties and the detrimental effects they can have on lower wage earners.

"I think we will end up not hurting lower income (residents)," he said Wednesday. "We can absolutely do this and put more money into everybody's pocket."

Justice has said the money workers will receive by not having state income tax taken out of paychecks will more than compensate for higher taxes on some products, with everyone remaining "cash positive."

"I think we made good progress and the summit was great," he said. "I think we did some really good work there. I have been so flexible it's off the charts.

Even if a compromise is reached with the Senate, the House remains an obstacle.

"The House has minds closed on this," he said. "It's unfortunate. They are not thinking as progressively and open-minded."

Justice said a special session may be possible but "I hope and pray we don't have to go there."

— Contact Charles Boothe at cboothe@bdtonline.com