CHARLES TOWN – A bill that would have given cities and possibly Jefferson County, the ability to implement a 1 percent sales tax died in the House Finance Committee last week after gaining unanimous passage in the Senate.
[cleeng_content id="494634836" description="Read it now!" price="0.49" t="article"]Senate Bill 487 would have allowed cities to impose a sales tax if they reduced their business and occupancy, or B&O, tax. Commissioner Dale Manuel said that if the bill passed it would also leave Jefferson County eligible to implement the sales tax, because under the Local Powers Act the county has the same rights to impose taxes as do cities.
Currently, only cities that are a part of the home rule pilot project, which grants a broad range of new authorities to cities participating, are allowed to implement a sales tax by reducing their B&O tax. Any city can implement such a tax if they completely eliminate B&O taxes, but, argues Ranson City Manager Andy Blake, cities doing so would eliminate more revenue than they could withstand.
“In the best of worlds, we’d like to get rid of all B&O taxes because it would make us competitive with everybody else, but for us its impossible,” he said. “The state sets maximum rates on property taxes. They set maximum rates on sales tax. Basically, we run the government with the tools that the state gives to us.”
“There are a lot of categories that are open to B&O that are not open to sales taxes,” Blake said.
Blake said the B&O tax hurts small businesses because it taxes gross earnings even if the company doesn’t turn a profit
“B&O is especially hard on small business startups, so sales tax helps us takes the burden off of these businesses in order to help economic development,” he said.
Since B&O taxes are charged on gross revenue, rather than on profit, they increase the overhead of small businesses trying to build themselves to the point of profitability, he said.
“It would make us more competitive with surrounding jurisdictions in surrounding states because – Winchester, Frederick, Hagerstown – they all have a sales tax,” he said. “West Virginia is one of only two states that have a B&O, but it is important to us because the Legislature hasn’t given us any other revenue tools.”
Blake said Ranson officials are looking at the city’s home rule application as a means to gain the authority to shift toward a sales tax.