According to The Weirton Daily Times, the West Virginia Senate passed Bill No. 392 (SB 392) by a vote of 28 to 4, approving the 10% personal income tax reduction plan proposed by Governor Patrick Morrisey, and increasing the consumption tax on electronic cigarettes and electronic cigarette products as a partial fiscal revenue compensation measure.
According to the provisions of the bill, the personal income tax rate will be reduced by approximately 10% retroactively from January 1st. This tax reduction measure is expected to return approximately 250 million US dollars to taxpayers after its full implementation.
To make up for some of the financial shortfall, the revised version of the Senate Finance Committee has adjusted the current structure of the electronic cigarette consumption tax. Currently, in West Virginia, electronic cigarettes are uniformly taxed at 7.5 cents per milliliter. The revised plan adopts a tiered system: closed electronic cigarette products (including cartridges and cartridge-type products) are taxed at $1.20 per unit; open refillable electronic cigarette products are taxed at 25 cents per milliliter.
Legislators expect that the new tax structure will increase approximately $22 million in fiscal revenue annually.
Jason Barrett, the chairman of the Senate Finance Committee, stated that including the increase in e-cigarette taxes in the bill is aimed at providing some revenue offset for the tax reduction plan, and at the same time creating a negotiation space for the House of Representatives to propose other fiscal compensation plans later.
However, the budget proposal from the House Finance Committee has not yet included the 10% tax cut plan. The chairman of the House Finance Committee, Vernon Criss, previously expressed concerns about accelerating the implementation of the tax cut, arguing that if the tax cut is implemented prematurely without meeting the existing economic growth trigger conditions, it might put pressure on state fiscal stability.
The former chairman of the Senate Finance Committee, Eric Tarr, also voted against the bill, stating that reducing approximately $250 million in tax revenue while the budgetary spending pressure still exists poses risks. He believes that if the tax reduction exceeds the state’s economic growth capacity, future legislative bodies may be forced to take measures such as increasing taxes or cutting expenditures.
Some Democratic lawmakers also opposed the plan, arguing that implementing large-scale tax cuts in the context of continuously increasing expenditures on education and child welfare was not prudent.
Supporters argue that the adjustment of e-cigarette taxes is regarded as an income supplement measure within the overall tax reduction framework. It aims to provide tax relief while maintaining a certain fiscal balance.
The bill has now been submitted to the West Virginia House of Representatives for review.
Image source: WV Legislative Photography