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W.Va. governor defends call for special session on taxes

November 01, 2006|by MATTHEW UMSTEAD

MARTINSBURG, W.VA. - Gov. Joe Manchin on Tuesday dismissed criticism of his timing for a special legislative session on tax reform he called for two days after the election, saying the proposals are only "one small part" of an incremental plan to reverse 14 years of inaction.

"We're going to be putting together another package for January," Manchin said Tuesday at the end of a press conference at Queen Street Gallery in Martinsburg.

For now, Manchin is asking the legislature to adopt a 1-cent reduction in the food tax, which would be made effective July 1, 2007, and then another 1-cent reduction in 2008, if adopted.

Cuts to the business franchise tax and corporate net income tax would be made effective Jan. 1, 2007, according to Rob Alsop, general counsel to the state Department of Revenue, who joined Manchin for the press conference attended by several local members of the legislature.

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A $10,000 increase in a refundable tax credit for older residents would not be available until the 2007 income tax year.

Manchin also noted proposals to close tax and credit loopholes, including an increase in the nonresident withholding tax rate from 4 to 6.5 percent, extension of nonresident withholding tax to capital gains on real estate and repeal of the West Virginia Capital Company Tax Credit program.

The latter doesn't have any credit to offer businesses until fiscal year 2010, according to a spreadsheet Manchin's office provided to lawmakers.

"We're going to capture every penny that's owed to West Virginia on the front end," Manchin said of the proposals effecting nonresidents.

After initial remarks, Manchin introduced AARP state director Frank Bellinetti, AFL-CIO leader Kenny Purdue, West Virginia Council of Churches Executive Director Dennis Sparks, and Steve Roberts with the West Virginia Chamber of Commerce, who each gave supportive comments regarding the tax reform package.

"It has equity across the board," Sparks said.

Roberts said Manchin was the first governor he could remember who "embraced" corporate net income tax reduction.

"These are very significant tax cuts," Roberts said.

When questioned why lawmakers who are leaving office or are defeated Tuesday are being asked to vote on the tax reforms, Manchin said it was urgent that the state take action quickly to keep the state's economy moving forward and that the state constitution is very clear.

"You serve until Dec. 1," Manchin said of lawmakers' terms of office.

Several lawmakers who attended the press conference said they still continue to push for changes to the Homestead exemption for seniors, which was not part of the package.

"That's the real way to fix it," said Del. Walter Duke, R-Berkeley.

Duke said he calculated that the proposed tax credit adjustment for seniors might only help about 5 percent of the older population.

"I feel the Eastern Panhandle got mugged again," Duke said.

State Sen. John Unger, D-Berkeley, agreed with the need to tackle the homestead exemption, but he defended Manchin's decision to have a special session on tax reform.

"It decreases the horse trading," Unger said of the limited agenda. "It gets us to work. People are suffering up here. Let's keep on pounding away at this and do it responsibly."

Eastern Panhandle Homebuilders Association President Dwayne Wean, who attended the press conference, described Manchin's proposal as "baby steps in the right direction."

"There are concerns ... our region would rather have a percentage on the homestead exemption," he said. "It's a Band-Aid ... at least it's a step in the right direction."

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