Senate Bill No. 450

(By Senator Chafin)

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[Introduced March 24, 1997; referred to the Committee
on Small Business; and then to the Committee on Finance.]
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A BILL to amend chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article three, relating to the creation of the "West Virginia New Business Incentive Tax Exemption Act of 1997"; providing for certain tax exemptions for qualified new businesses in the twenty West Virginia counties with the highest rate of unemployment; and providing other conditions and procedures.

Be it enacted by the Legislature of West Virginia:
That chapter five-b of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article three, to read as follows:

ARTICLE 3. WEST VIRGINIA NEW BUSINESS INCENTIVE TAX EXEMPTION ACT OF 1997.
§5B-3-1. Legislative findings.
The Legislature finds and declares that the economic welfare of the people of West Virginia is enhanced by the continual encouragement, development, growth and expansion of private enterprise within this state. Certain economically depressed areas in the state need particular attention to create new jobs, stimulate economic activity and attract private sector investment rather than government subsidy to improve the quality of life of their citizens. The Legislature finds that effective methods to encourage new economic activity in these depressed areas of the state are tax relief and the removal of unnecessary governmental barriers to the creation of economic growth.
§5B-3-2. Definitions.
As used in this article:
(a) "Qualified new business" means any person, corporation or other entity who, during the time of designation of a high unemployment area, is engaged in the active conduct of a trade or business in that area in one of the twenty counties in West Virginia with the highest unemployment rate for the last year:
(1) That is not a business involved in mineral extraction, mining, timber harvesting, pulp processing, farming or mining or harvesting natural resources;
(2) The county commission where the qualified new business will be located certifies that the qualified new business will not directly compete with sales of products made or services provided by an existing business in the county or an adjacent county and, that it is not a reconfiguration or restructuring of an existing or previously existing business or business organization or other entity; and
(3) The county commission where the qualified new business will be located certifies that the qualified new business will not adversely impact or harm the environment, and that the qualified new business would not be likely to locate in West Virginia if it was not given the benefit of the exemption provided herein.
(b) "High unemployment area" means an area in one of the twenty counties in West Virginia with the highest unemployment rate for the last year.
§5B-3-3. Tax exemptions for new businesses located in high unemployment areas.
Notwithstanding any other provision of this code to the contrary, the following exemptions apply to designated high unemployment areas of the state:
(a) A qualified new business shall be exempt from the taxes imposed on it by articles twelve-a, thirteen, thirteen-b, twenty-one and twenty-four, chapter eleven of this code;
(b) Any venture capital company authorized under the provisions of article one, chapter five-e of this code, lending institution, individual or other entity who loans money to a qualified new business is exempt from the taxes imposed on it for any interest earned or received from the qualified new business; and
(c) Any venture capital company authorized under the provisions of article one, chapter five-e of this code, lending institution, individual or other entity is exempt from the taxes imposed on it for any gain earned or received from the sale of stock purchased in a qualified new business.
§5B-3-4. High unemployment area conditions for tax exemptions.
The following additional conditions apply to new businesses which locate in designated high unemployment areas:
(a) The exemptions provided in this article apply for a period of ten years from the commencement of the qualified new business;
(b) The exemptions are in effect for any qualified new business commencing within five years after the effective date of this article;
(c) Any changes or amendments to this article may not be retroactively imposed to restrict past or future exemptions conferred by this article upon qualified new businesses that rely upon the provisions of this article;
(d) The exemptions provided by this article apply to the counties that are among the twenty counties with the highest unemployment rate for the previous year as of the first day of January of each year: Provided, That counties that qualify may change during the five-year period if their unemployment rate changes; and
(e) To qualify for the tax exemptions the new business must give first preference to hiring qualified able-bodied welfare recipients, relating to the West Virginia welfare reform program, and the welfare works program.


NOTE: This bill creates the "West Virginia New Business Incentive Tax Exemption Act of 1997" that exempts qualified new businesses from taxation; and exempts interest earned by entities that make loans to these qualified new businesses or gains from the sale of stock in a qualified new business. The qualified new business must be in one of the twenty counties in the state with the highest unemployment rate for the last year and must give first preference to hiring able-bodied welfare recipients.
This article is new; therefore, strike-throughs and underscoring have been omitted.