W.Va. sales tax would top US states under income tax cut plan
CHARLESTON (AP) — West Virginia’s consumer sales tax rate would increase from 6 percent to 7.9 percent under a proposal submitted to the Legislature on Thursday to eliminate the state’s personal income tax.
The sales tax increase would give West Virginia the highest rate among all U.S. states. Puerto Rico has a double-digit sales tax.
Republican Gov. Jim Justice’s proposal would give residents a 60 percent cut in the personal income tax in the first year. People earning less than $35,000 a year would receive an unspecified tax rebate check.
“We may never have an opportunity like this ever again,” Justice said in a statement.
The statement did not address income tax cuts beyond the first year. Justice said previously that if job and population growth don’t happen after the initial tax cut, then no further cuts would occur.
Reducing the income tax 60 percent would amount to a $1.04 billion hit on the state’s budget. The consumer sales tax increase alone would offset that by $475 million.
Fully eliminating the personal income tax would cut nearly half of the state’s budget, or about $2.15 billion. Nine states do not currently have a state income tax.
To further balance the income tax cut, Justice also anticipated changes in severance taxes on the production of coal, oil and natural gas as well as increases in taxes on tobacco products, beer, wine and liquor.
The soda tax of a penny for a 16.9-ounce bottle has not increased since it was implemented in 1951, and the tax on cigarettes last went up to $1.20 per pack in 2016.
The governor wants to increase the soda tax to 6 cents per bottle and double the cigarette tax to $2.25 per pack. Along with other soft drink tax changes, those would amount to a $132.5 million increase for the state budget.
Justice also anticipates a luxury-type tax on any purchased item of least $5,000, excluding homes and cars.
In addition, professional services covered by the consumer sales tax would be expanded to include computer hardware and software, legal services, accounting services, certain advertising, electronic data processing, and health and fitness memberships, according to the proposal.
West Virginia lost nearly 4 percent of its population over the past decade. Justice has said the end goal of attracting more residents to the state could mean more tax dollars, better schools, and higher wages and property values.
He said that “now we need to make a big move to put us over the top, so when people look at another population map 70 years from now, West Virginia will be right up there with the very top states in the country.”