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Tax proposal irks businesses

May 26, 1999|By BRYN MICKLE

MARTINSBURG, W.Va. - A proposed tax increase is being criticized by some who feel it will make it harder for city businesses to turn a profit.

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The Martinsburg City Council is considering an increase in some business and occupation tax rates, saying the added revenue will help guarantee the city's ability to balance future budgets without cutting services.

Some area business owners, however, feel the so-called "B-and-O" tax forces them to shoulder an unfair share of the city's tax burden.

"I support city services, but I think any tax increase should be across the board," Stewart's Men's Wear owner Doug Stewart said.

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The proposed tax hike would generate about $750,000 annually by increasing rates on business groups that include retailers and contracting businesses, according to city estimates.

The increase also would affect manufacturers, wholesalers, loan companies, service businesses, owners of rental properties, banks and other financial businesses.

The rate increases vary for each category and would fall within the state's maximum taxable rate, according to city estimates.

The City Council has scheduled a June 2 meeting at 7 p.m. at City Hall when the council could vote on the rate hike.

Martinsburg has increased B-and-O taxes once since 1969. The proposed changes would place the city's rates on par with those of other West Virginia cities including Wheeling and Morgantown.

City councilman and Pattersons drugstore owner George Karos is among those who think the tax was a bad idea 20 years ago and still is.

"It's regressive and discriminatory," he said. "They start taxing you before you even make a profit."

The B-and-O tax is levied on gross revenues instead of profits, which critics claim puts businesses at a competitive disadvantage.

The state of West Virginia repealed a statewide B-and-O tax in 1987 but has allowed municipalities to continue charging it, Martinsburg attorney Mike Caryl said.

"If it's a bad tax for the state it's a bad tax for the cities," Caryl said.

Caryl, a member of a state tax reform commission, said one possible alternative would be to allow cities to levy a piggyback tax on state income or sales tax.

The Martinsburg-Berkeley County Chamber of Commerce has concerns about the tax increase and has asked the city to consider other options, Chamber President Max Oates said.

"We recognize the need for additional city revenues, but the question is if this is the best or fairest way to do that," Oates said.

The answer to that question is yes, according to City Councilman Richard Yauger, who sits on the city's Budget and Finance Committee.

The committee looked at several revenue-generating options and felt the B-and-O tax increase would be fair, Yauger said.

The committee also recommended other revenue measures, including an increase in the city's garbage collection fees and charging a penalty for unpaid fire fees, he said.

"The city has been kind to businesses. The state legislature has provided (the B-and-O tax) as a source of revenue, and we're taking advantage of it," Yauger said.

Yauger said the committee looked at the possibility of an across-the-board property tax increase, but said that rate had already been set at 3 percent and the committee opted against changing it again.

The city has already approved a $6.9 million general fund budget for the 1999-2000 fiscal year. Increases in B-and-O taxes, along with the garbage and fire fees, would generate an additional $925,000 per year.

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