CHARLESTON — Gov. Joe Manchin’s ongoing bid to overhaul West Virginia’s tax system recommended Wednesday that voters allow the Legislature to tinker with taxes on business machinery and inventory.
The state Constitution now closely controls property tax policy. The Tax Modernization Project Work Group unanimously proposed amending that language so lawmakers would have more flexibility with those taxes.
Panel members cited testimony and research that target property taxes on equipment, machinery and inventory as a drag on West Virginia’s ailing manufacturing base.
Karen Price, a lobbyist for the state’s manufacturers, urged action on the topic. She noted that other states including neighboring Ohio and Virginia have either eliminated such taxes or have begun phasing them out over the next several years.
But the recommendation also calls on lawmakers to consider the effect of any changes on counties, which rely heavily on property taxes.
Jackson County Commission President Don Stephens told the group that these kinds of property taxes provide one-fourth of his county’s revenues. Questioning whether businesses consider them a significant burden, Stephens said some of the manufacturers in his county appear more concerned with their electric costs.
Panel members Cal Kent, a Marshall University economics professors, called the taxes on tangible business property the biggest remaining tax-related hurdle to economic development the state faces.
But as a former Huntington city councilman, Kent said he also recognizes the importance of these revenues to local governments.
The panel also heard from speakers representing the state’s associations of county commissioners, assessors and other county officials. They echoed Stephens’ concerns about the potential impact on county finances and services, and said any changes must include replacement revenues.
State Tax Commissioner Christopher Morris, who chairs the group, noted that the recommendation does not advocate such specific changes as cuts or exemptions. Wednesday’s discussions includes such possible routes as reducing rates on such property while increasing rates on real estate, or focusing specifically on either inventory or equipment.
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