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Tax proposal a Panhandle boon

July 01, 1999|By BRYN MICKLE

MARTINSBURG, W.Va. - Eastern Panhandle counties could see upwards of $7.6 million in additional tax revenue under a proposed change in the state tax structure, according to the West Virginia Association of Counties.

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Gov. Cecil Underwood's Commission on Fair Taxation has suggested repealing personal property taxes as part of an overhaul on the state's tax code.

While 29 counties around the state would lose revenue under the plan, the WVAC statistics show the Eastern Panhandle would gain revenue.

Berkeley County would receive an estimated $3.7 million in additional money, and Jefferson County would gain about $2.8 million, according to the WVAC. Morgan County would receive about $1.1 million in additional tax money each year.

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Mike Caryl, a Martinsburg attorney who serves as vice co-chairman on the tax commission, said counties would receive the additional revenue from a provision in the plan that calls for full state funding of county schools.

West Virginia counties currently fund about a quarter of their county school budgets, Caryl said, adding he has not yet seen the report.

The commission's tax plan would repeal taxes on vehicles, inventories, equipment and fixtures under a process that would phase the tax out over a three-year period.

The plan includes a "hold harmless" provision that would require the state to make up any difference for counties that lose money under the new tax structure, according to the WVAC.

"This appears to create a kind of 'welfare county' situation," according to WVAC Executive Director Patricia L. Hamilton.

The tax commission maintains the personal property tax has strong negative effect on business and discourages economic development.

Del. John Doyle, D-Jefferson, said the reform plan has "zero chance" of being passed by the West Virginia Legislature.

With West Virginians already paying higher sales taxes and lower property taxes than the national average, Doyle said the tax reform proposal would throw the system further out of balance.

Plans to create a single business tax would have a negative effect on the state's economy by taxing both large and small businesses on gross revenue instead of profits, he said.

"That's going to be a hard hit for small businesses with tight profit margins," Doyle said. "Those small businesses make up about 85 percent of the state economy."

The prospect of more tax revenue was met with cautious optimism by Berkeley County Commission President D. Wayne Dunham.

"It's always good to get extra money, but if it costs business, it will hurt us later," Dunham said.

The object of the tax reform is to provide local governments with more revenue generating options, including the ability to levy piggyback taxes on the state's income and sales taxes, Caryl said.

"I would caution that any numbers at this point would be hypothetical and may or may not take into effect if a county is using its full tax potential," Caryl said.

A final report from the tax commission is expected in the next few weeks, he said.

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