HARPERS FERRY – Harpers Ferry will soon hold a public meeting on a new set of ordinances aimed at stepping up regular enforcement of its Business and Occupation Tax. The ordinances also clarify tax rates for various types of businesses within the town’s boundaries.
The town’s current B&O tax ordinance is hampered by a number of limitations, explained Betsy Bainbridge, who chairs the town council’s Budget and Finance Committee.
“We want something that is both enforceable and fair,” Bainbridge said.
The current ordinance determines who should pay B&O taxes, and at what rate they should pay, by making reference to a section of the West Virginia Code that was repealed in the 1970s.
“The question was, who all does it apply to? Because there are people, like a contractor you hire from Charles Town to work on your house? Is that taxable?” Mayor Joe Anderson said.
Anderson said the town eventually determined that the tax would apply to any businesses conducting business within Harpers Ferry. Outside construction contractors, for example, will have to pay the tax. “Even finding the old tax code is hard. In fact, (Council Member Jerry Hutton) had to go to the Library of Congress to find it,” Bainbridge said.
The new ordinance sets out a defined schedule of rates based on the type of business the taxpaying company is involved in. These rates range from 0.1 percent of gross receipts for manufacturers to 1 percent for electrical utilities.
Many in Harpers Ferry have expressed the concern that some businesses may be underreporting their sales in order to pay lower B&O taxes.
“We didn’t have a way of verifying tax information,” Anderson said.
The town council has decided to enter into an information exchange agreement with the state tax commissioner to ensure that the sales numbers reported to them are the same as those reported to the state. “It just seemed to be the right and fair thing to do. If people are underpaying – and we don’t know that that’s the case – it is very unfair to those who are doing what they need to do,” Bainbridge said.
Bainbridge says the town is also taking particular steps to ensure the privacy of the tax records it will be sharing with the state.
“We realize that people’s taxes are confidential information. We will maintain confidentiality absolutely.” The information sharing agreement includes a clause underlining the fact that it is a misdemeanor, punishable by a $1,000 fine and one year in jail, for any town official to share tax information with the general public.
Anderson said that B&O tax revenue is vital to maintaining basic town services in Harpers Ferry.
“It’s double the property tax that we get,” Anderson said, adding that the town estimates it will collect around $100,000 in B&O taxes this year.
Harpers Ferry brings in slightly more than that from distributions of video lottery and table game revenue, but Anderson points out that that sum can fluctuate greatly. Further, the town has little or no control over that revenue stream.
“There is some concern that we have too heavy a reliance on table game and video lottery money,” Anderson said.
The council will hold a special public meeting to discuss the changes to the B&O tax system on Thursday, April 5 at 6:00 p.m. in town hall.