Talk of phasing out West Virginia’s personal income tax appears to be dead this year, but Democratic lawmakers in the Legislature believe cutting the consumer sales and use tax is the right thing to do.
Democratic members of the Senate and House of Delegates held a press conference Tuesday morning announcing a plan to immediately reduce the consumer sales and use tax from 6% to 4.75%, a 1.25% reduction. Bills are expected to be introduced in the House and the Senate as soon as this week.
The 1.25% sales tax cut would cost $312.5 million, nearly the same amount as the $315 million in matching funds set aside for the Department of Economic Development to use when North Carolina-based Nucor starts construction of a new steel mill in Mason County.
The funds would come out of the state’s budget revenue surplus, sitting at nearly $400 million according to fiscal year-to-date tax collections reported by the Department of Revenue.
Once the fiscal year ends on June 30, if the state Rainy Day Fund hits $1 billion, that would trigger another .25% cut in the sales tax at a cost of $62.5 million, with those funds coming out of the Rainy Day Fund. Going forward, the sales tax would be reduced by .25% each fiscal year any time the Rainy Day Fund hits $1 billion, possibly phasing out the tax altogether.