CHARLESTON, W.Va. – Several delegates representing border districts in the House of Delegates today said they will oppose efforts to increase the state’s sales tax to 7 percent, as proposed in the plan Gov. Jim Justice will submit in a special session next week.
The current budget framework being negotiated between the Governor and Senate leadership would increase the consumer sales tax to 7 percent and raise other business taxes, offsetting it somewhat with a reduction in personal income tax rates.
“A 7-percent sales tax will make it much harder for our border retailers to compete with businesses in neighboring states,” said Majority Leader Daryl Cowles, R-Morgan. “Raising our sales tax that high could do significant harm to our economy due to the loss of retail activity, which could more than offset the supposed benefits of reducing the income tax.”
“We must avoid making it more difficult for our local businesses to compete with businesses located just across the state border,” said Judiciary Committee Chairman John Shott, R-Mercer. “Our sales tax is already higher than Virginia and Ohio. If we raise the sales tax by 1 percent, we will have a higher tax than Pennsylvania, Maryland and Kentucky. Our local businesses are already struggling, and raising the sales tax will only make it more difficult for them to survive.”
“Politicians in Charleston do not understand how easy it is for people in the panhandles to cross the border to shop,” said Delegate Jill Upson, R-Jefferson. “Pushing our sales tax significantly higher than our neighboring states will put our retailers at a disadvantage and drive more business out of our state.”
Delegates said the proposal to increase the sales tax to 7 percent, combined with other taxes like an increase in the gasoline tax, a Commercial Activities Tax or increase in the corporate net income tax, could have a significant negative impact on businesses in border areas.
“A higher sales tax is only going to drive more business out of the Eastern Panhandle and into Maryland and Virginia,” said Finance Committee Vice Chairman Eric Householder, R-Berkeley. “Combining it with higher gas taxes will further erode business for our retailers, pushing shoppers out of state and costing us revenue and jobs.”
“The massive tax increases proposed would have a devastating effect on our border communities,” said Government Organization Committee Chairman Gary Howell, R-Mineral. “Last year’s tobacco tax increase led to layoffs in Mineral County as cross-border sales dropped significantly. The proposed increases in fuel and sales taxes would have a similar effect, reducing employment in our state.”
“Retailers in Bluefield and other areas along the border already suffer from having higher gas and cigarette taxes than Virginia,” said Delegate Marty Gearheart, R-Mercer. “While I like the concept of cutting income taxes, doing it by hiking our sales tax to 7 percent is only going to hurt our border businesses. Couple that with higher business taxes and DMV fees, along with continued tolls on the Turnpike, and this plan is a major hit to the southern West Virginia economy.”
House Majority Whip Carol Miller, R-Cabell, said the sales tax hike would be especially detrimental to border cities that have levied local taxes as part of the Municipal Home Rule program.
“A 1-percent increase in the sales tax will especially hurt our Home Rule cities like Huntington, which will end up having an 8-percent overall tax rate,” Delegate Miller said. “This kind of tax increase will not only send business across the border, but hurt our cities that are struggling to balance their own budgets.”
The delegates encouraged Gov. Jim Justice and Senate leadership to work with members of the House on a budget solution that does not put border-area businesses and jobs at risk.