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State senator locks horns with Manchin on tax plan

October 31, 2006|by MATTHEW UMSTEAD

MARTINSBURG, W.VA. - State Sen. John Yoder said West Virginia Gov. Joe Manchin's plan to convene a special legislative session on tax reform two days after the election sets a "dangerous precedent," shortchanges public input and could be challenged constitutionally.

Yoder, R-Jefferson, described the reforms announced Monday by Manchin as "token portions" of the Republican party's agenda.

Manchin's plan would cut the sales tax on food by another 2 cents, exempt more poor families from income taxes and lower several business taxes, according to The Associated Press. The food tax has been reduced from 6 cents to 5 cents under Manchin's administration.

The Democratic governor also said he will ask lawmakers - including lame ducks who lose in next Tuesday's general election - to double the $10,000 income tax exemption seniors earn from paying property taxes. The term of outgoing lawmakers ends Dec. 1.

"This will provide a framework as our efforts continue during the regular session (in January) and in the years to come," Manchin told The Associated Press. He invited Yoder to join him at Queen Street Gallery in Martinsburg this morning to discuss tax modernization and the special session.

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The legislation Manchin outlined would cut taxes by an estimated $142 million by 2008. He said stepped-up collection efforts would help offset the resulting loss in state revenue.

Manchin also proposed keeping the sales tax on soft drinks at 6 percent, for the revenue and as part of his administration's health-related initiatives.

Yoder doubted the sincerity of the proposals and questioned whether the special session met the standard of being necessary for the "health, safety and general welfare" of state residents.

"Is a tax proposal the 'general welfare'? I would say it's probably not," said Yoder, adding that he only knew of possibly two special sessions held after an election, one in 1908.

"I can't really see that this really does anything," Yoder said of the legislation proposed.

With one notable exception, Manchin's plan embraced recommendations detailed in a 262-page study by the state Tax Modernization Project that he commissioned earlier this year.

The study released Monday cautioned against cutting the food tax further. Reduced from 6 cents per dollar to 5 cents last year, the call for its complete and immediate repeal has become an election issue.

"A repeal or significant reduction of the sales tax on food for home consumption are not viable given that many alternative tax provisions would provide greater economic stimulus," the study said.

Manchin proposed reducing the tax on groceries to 3 cents per dollar by 2008.

The governor's proposed family tax credit would erase income taxes for residents who earn at or below the federal poverty rate. It would cut the tax bills of 100,000 West Virginians by as much as $24 million, the study estimates, with a corresponding loss to state revenues.

For businesses, Manchin wants legislators to reduce the franchise tax from 0.7 percent to 0.55 percent, and the corporate net income tax from 9 percent to 8.75 percent. The study recommended no more than a half-percentage point cut, but argued that would still lower the state's ranking for that tax from seventh highest in the country to 14th highest.

"There is something for everybody here," Manchin said.

Yoder said there is no public input when lawmakers don't have time to talk to their constituents about the special session legislation or have the liberty to amend bills. He cited the governor's limiting of the "call" or what the legislature can consider in the special session.

"I think you have a real question of balance of power," said Yoder, a Harpers Ferry, W.Va., attorney. "The people that are really hurt are the voters and the public."

The Associated Press contributed to this story.

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