THE MANCHIN REPORT: Tax Modernization a Significant Step Toward Improving Economy
By Joe ManchinGovernor of West Virginia
Charleston, WV (HNN) -- Several months ago, I asked the West Virginia Department of Revenue to embark on an exhaustive study of our tax system looking at how we could not only modernize our current system, but also give our taxpayers some relief so that we could continue to make our state more attractive to both businesses and citizens alike.
After conducting exhaustive research, holding numerous meetings statewide and speaking with leaders from every constituency, the members of the West Virginia Tax Modernization Project released a comprehensive report on their efforts to state leaders this week.
Needless to say, the work of the Tax Modernization Project proved to be a daunting and ambitious undertaking. As the Report suggests, our current tax system has all too frequently discouraged investment, inhibited economic growth and failed to keep pace with structural changes to the economy of the 21st Century.
Any attempt to conduct a major overhaul of our tax laws will present considerations and some difficult choices, and history cautions against attempting such a comprehensive reform as a one-time change. Many improvements to our tax structure may take years to implement fully and should therefore be phased in over time.
Some choices put before us in this Report are common-sense based and warrant our immediate attention, which is why I announced this week that I will call the members of the legislature into special session, beginning Nov. 9, 2006, to commence tax modernization work and establish a foundation for these efforts that will continue throughout the regular session in January and in the months and years to come.
With the November Special Session, we hope to do the following: continue responsible reduction of the Food Tax by two percent over the next two years, effectively cutting the tax in half from its 2005 level of six percent to a more manageable three percent; create a Low-Income Family Tax Credit that removes any disincentive to work by eliminating West Virginia Personal Income Tax on families with incomes below the federal poverty level, positively impacting approximately 100,000 West Virginians; increase the Refundable Property Tax Credit for Seniors by doubling the value available for the credit from $10,000 to $20,000, thus providing relief to West Virginia seniors within 150 percent of the poverty level; reduce the Business Franchise Tax and Corporate Net Income Tax rates, putting more than $30 million back in to the state’s economy and easing the burden on our vitally important small businesses that mean so much to West Virginia’s communities; and, create a Contractors’ Sales Tax Exemption for purchases used directly by Manufacturing Facilities to assist manufacturers in their construction efforts, encouraging additional investments in West Virginia.
During the past week, I traveled the state with a diverse coalition of West Virginia stakeholders to discuss my plans for the Special Session and the Tax Modernization Report. The response from those West Virginians we met was overwhelmingly positive and strictly non-partisan.
As I’ve said many times, our tax system did not develop overnight and, as this report shows, it cannot be fully modernized overnight. However, the findings of this workgroup give us a good place to begin. I am confident that, working together with the legislature, this Special Session Tax Plan will be a success. It will be a success because we’ve once again tried to reach out to bring all sides to the table to work together to do what is right for West Virginia.