CLARKSBURG, W.Va. (AP) — Like it or not, shoppers will likely be paying 7 percent in sales taxes on their purchases no matter where they go in West Virginia.
Eighteen municipalities in the state’s home rule pilot program have either enacted a 1 percent sales tax or plan to do so, according to a report from the West Virginia Municipal Home Rule Board.
“I would say that as we proceed forward, we will eventually see more municipalities having the availability to enact the 1 percent sales tax,” Clarksburg City Manager Martin Howe said.
That’s because it would be more beneficial to the municipalities in terms of revenues and to merchants in terms of cuts in business and occupation taxes, Howe added.
Bridgeport Mayor Bob Greer echoed Howe’s sentiments.
“The current financial structure for most, if not all, municipalities is rather antiquated with the B&O tax mechanism,” Greer said.
“The sales tax option, even though limited as it is, provides opportunities for different municipalities to address a wide range of issues, and I’m not surprised that municipalities have taken advantage of it,” Greer said.
Clarksburg and Bridgeport are among four cities planning to impose a 1 percent sales tax on July 1 — the start of the next fiscal year.
South Charleston and Weirton are the other two, according to the Home Rule Board’s progress report on participating municipalities.
Twelve cities have already enacted a sales tax, according to the report.
They are Fairmont, Charles Town, Charleston, Harpers Ferry, Huntington, Martinsburg, Milton, Nitro, Parkersburg, Ranson, Vienna and Wheeling.
Grafton and Dunbar are in the progress of enacting a sales tax, according to the report.
Five cities that included sales tax proposals in their home rule plans have not imposed them, according to the report.
They are Shinnston, Morgantown, Beckley, Bluefield and Princeton.
A municipal sales tax is in addition to the 6 percent state sales tax.
Items not taxed by the state are also exempt from municipal sales taxes. They include groceries, prescription medications, motor fuel and vehicles.
Home rule gives cities more say in how they govern by allowing them to implement ordinances, acts, resolutions, rules and regulations without regard to state laws.
Cities in the program can impose a 1 percent sales tax provided they repeal or reduce some of their B&O taxes.
Municipalities not in the home rule program can impose a sales tax. However, they must eliminate their B&O tax, which would be economic suicide.
Clarksburg is reducing its B&O tax on retail sales and manufacturing.
Between the sales tax revenues and B&O tax cuts, Clarksburg expects to raise an additional $2.2 million a year, according to financial projects included in the city’s home rule plan.
Those additional revenues will go to police and firefighter pensions, infrastructure improvements and economic development activities, according to the home rule plan.
Bridgeport is imposing a 1 percent sales tax in exchange for repealing its B&O tax on manufacturing.
Between the sales tax revenues and B&O cut, Bridgeport expects to raise an additional $3.13 million a year, according to the city’s financial projections.
The additional revenues will go toward the construction, operation and maintenance of a proposed indoor recreation facility.
Economists generally regard sales taxes as regressive, said John Deskins, director of West Virginia University’s Bureau of Business and Economic Research.
Sales taxes affect low-wage earners who spend more of their income on goods and services, Deskins said.
“Sales taxes tend to be less progressive because they don’t tax savings,” Deskins said. “Consumption rates are higher among low-income people.
“High-income people save more than low-income people,” he added. “People with higher incomes tend to spend more on services that aren’t taxed.”
But Howe said B&O taxes are also regressive because they are assessed on businesses’ gross receipts.
“The B&O tax is an antiquated tax,” Howe said. “Technically, a business could be in the red and still be paying the B&O tax.
“You’d rather be in a position to reduce taxes on the business to foster their growth as well as developing new business,” he added. “Ultimately the consumer is still paying the tax under B&O” because it’s passed on.
Information from: The Exponent Telegram, http://www.theet.com