Published: February 22, 2008 10:07 pm      

Senate approves tax breaks

Corperate, commercial aircraft rollback expected to benefit Mercer Airport

CHARLESTON — The Senate approved a tax break Friday that would roll back property taxes on commercial and corporate aircraft.

The Senate also agreed Friday to offer cuts to seniors and appliance buyers. However, businesses in the Mountain State must wait another seven years to see the franchise tax become history.

The rollback on commercial and corporate aircraft taxes was a measure backed by Gov. Joe Manchin, and is expected to benefit airports across West Virginia, including the Mercer County facility. As officials work to restore commercial air service in Bluefield, they also hope to see an increase in the number of corporate aircraft at the Mercer County Airport, Susan Chernenko, director of the West Virginia Department of Transportation’s Aeronautics Commission, said Thursday.

Sen. John Unger, D-Berkeley, led the chamber into freezing existing property tax rates for anyone over 65 with an annual income of $25,000 or less.

Anyone buying certain appliances that cost $2,500 or less could skip the sales tax in the first week of each September in a bill Gov. Joe Manchin offered a few weeks ago. Under a Senate amendment, the tax holiday would end in 2010.

Manchin reversed his philosophy a bit, refusing in his first year of office to support the sales tax holiday in back-to-school purchases inaugurated by former Gov. Bob Wise.

Senate Minority Leader Don Caruth, R-Mercer, debated Economic Development Chairman Brooks McCabe, D-Kanawha, at length over the Republican-led bid to apply the brakes this year to the business franchise tax.

All the two agreed on was that the tax is West Virginia’s “most onerous” on the business community.

But McCabe alluded to a bundle of tax reforms, among them the inventory tax and corporate net income, along with another one-penny drop in the tax on groceries.

All told, the tax reductions will rob the state’s coffers of between $138 million and $140 million, he said.

While things look rosy this year with a whopping surplus, both McCabe and Finance Chairman Walt Helmick, D-Pocahontas, raised the specter of a downtown in the economy — even a recession — and if that occurs, the $70 million loss the Caruth amendment costs would look massive.

“What if we have a 10 percent reduction in the price of coal?” he asked.

“That’s another $30 million out of the general revenue fund.”

Suppose, he asked, if lotteries flourish in surrounding states? That could translate into another $50 million setback.

But Sen. John Yoder, R-Jefferson, said the state is losing money now by whittling down the franchise tax over a years-long period, without gaining the new businesses or expansion from old ones that total and immediate elimination would prompt.

Under the three-year extension Helmick’s panel approved, the tax will stay around until 2015.

“All it’s going to do is cause us to lose revenue over this time period of time because until we get it down to zero, it’s not going to make us competitive with neighboring states,” Yoder said.

In opposing immediate elimination of the tax, Helmick cautioned that some ill winds are blowing in the economy, and downturn has been projected by the experts.

“We could find ourselves in a little trouble,” he said.

Caruth, however, said opponents are ignoring the influx of businesses and the money they can generate if the tax is wiped out.

What’s more, he said, border county businesses find it tough to compete with states with little or no franchise tax.

Moreover, by 2015, he pointed out, the Legislature will have gone through a number of changes, and a new governor will be at the helm, and who can say what the tax sentiment will be by then.

“One of the problems we have with our economy is the fact that we’re unpredictable,” the GOP leader said.

“We simply have to stop making promises to do future economic development and do it now.”

His amendment was smothered on a voice vote along party lines.

After some debate, the Senate voted 19-11 to approve Unger’s amendment to SB239 that creates a seniors’ property tax payment deferment.

His change leaves taxes where they are if annual incomes don’t exceed $25,000.

“These seniors are at the point where they are afraid they can’t pay the increase every year,” Unger said.

Manchin’s tax holiday covers a variety of appliances — from refrigerators to battery charges to dishwashers.

To qualify, the energy efficient guidelines set by the Environmental Protection Agency and federal Department of Energy must be met as evidenced by the Energy Star label.

Bluefield Daily Telegraph reporter Charles Owens contributed to this story