Senate delays vote on income tax bill

Published: Apr. 6, 2021 at 11:05 AM EDT
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CHARLESTON, W.Va. (WSAZ) - The West Virginia Senate decided to delay the third reading of their version of House Bill 3300 that was scheduled for Tuesday morning’s floor session.

The third reading, which will include amendments and a vote, is now scheduled for Wednesday. This new bill completely rewrote the House proposal to eliminate the state personal income tax by including a number of new tax increases to cover the budget gap.

This delay comes after Gov. Jim Justice introduced a fourth plan on Monday in his quest to eliminate the state personal income tax during a summit designed to bring Democratic and Republican leaders from the House and Senate together.

Senate Majority Leader Tom Takubo (R-Kanawha) said the decision to postpone action came due to the governor’s new proposal, including changes that might be made to the bill and budget proposal ahead of a vote.

“There’s good and bad in all the plans,” Takubo said about the four different proposals. “Our job is now to take the good out of each of the plans and mesh those together. There’s a lot of safety provisions in the Senate plan. There were provisions such as the rebates that was in the governor’s plan. I think the best bill is to really merge those together.”

“West Virginians need to understand that when they are working, that every single dollar that you make is getting income tax pulled out of it,” Takubo continued. “What we are saying is we want to take a small increase in the sales tax. But most of what people spend their money on, their mortgage, medical bills, groceries, doesn’t get any money pulled out of it. You’re changing a small 2% increase of a few things that are taxed versus every dollar that you are making.”

While Speaker of the House Roger Hanshaw (R-Clay) is willing to find some sort of compromise between the different plans after listening to viewpoints at Monday’s summit, he does not believe that can happen before the legislative session ends Saturday. Hanshaw told WSAZ he thinks a special session later in the year will be needed to sort through the differences and get a bill passed.

“I think there is significant interest among the members of both bodies of the Legislature, and I know there is significant interest on the part of Governor Justice, to keep working together and see if there is something we can address later in the year,” Hanshaw said.

He said the largest sticking point preventing House members from supporting the Senate or Justice’s plan is an increase that could hurt small businesses and border communities. Taxes on goods and services would cause significant problems to these areas, in addition to eliminating the sales tax exemption for professional services.

“Perhaps getting West Virginia onto that list of states with no income tax requires that we consider those proposals,” Hanshaw said. “We just haven’t yet decided that we are ready to consider them today.”

Takubo said in addition to tax increases, a number of state programs would face budget cuts under these income tax reduction proposals. However, he said most of those budget cuts are in areas that have proven to be inefficient during the COVID-19 pandemic. Things like telemedicine allow for more cost effective service that often improves service quality at the same time.

“In some instances, I think we may be improving services just by doing things differently,” Takubo said. “They just hadn’t been that way. We were just forced to do them differently, but as a consequence we have seen many things that work really well doing them differently. Those are the things we are trying to incorporate.”

People on both sides of the Capitol agree this plan can be a difference maker to attract people and businesses to West Virginia, but they are not sure the best way to get it completed.

Takubo said a number of changes need to be made to the current Senate version of HB 3300 to get his support, including removing the food tax and reinstating a rebate system in Justice’s proposal that ensures the state’s lowest earners are not paying more in tax under this shift from income to consumption tax.

Hanshaw said the Legislature needs to focus on more than just income tax, as people will look at schools, roads and neighborhoods when considering moving to the Mountain State.

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