West Virginia House Bill HB4764

West Virginia 2022 Regular Session

• Introduced: 2/15/22
• Refer: 2/15/22

Caption

To reduce West Virginia sales tax on gasoline and diesel to zero, and make up difference with increase in sales tax equivalent to rate of tax

Impact

The proposed bill will significantly alter the state's tax structure, moving away from an excise tax on motor fuel to a sales tax increase. By making the excise tax on gas and diesel zero, it is expected to positively impact working-class families by reducing the immediate cost of fuel. The bill’s authors argue that the increased sales tax, set to rise to 7.8%, will remain revenue neutral while providing a more stable source of revenue, which adjusts more effectively with inflation compared to excise taxes.

Summary

House Bill 4764 aims to eliminate the motor fuel excise tax on gasoline and diesel fuel in West Virginia, proposing to replace this loss of revenue with a corresponding increase in the state sales tax. The bill seeks to reduce fuel costs for consumers, with the intention of attracting more visitors and driving economic activity within the state. The legislation claims that lower fuel prices will encourage not only tourism but also general driving activity, enhancing revenue from sales tax as more residents and visitors engage in purchasing goods and services.

Sentiment

The sentiment surrounding HB 4764 is generally positive among its proponents, who see it as a beneficial economic strategy that alleviates the financial burden of fuel costs on residents. However, there are concerns among some critics regarding the implications of shifting to a sales tax, particularly in relation to how it might disproportionately affect lower-income families who would pay a higher percentage of their income in sales tax compared to the former excise tax system. This shift raises questions about fairness and equity in taxation.

Contention

There are notable points of contention related to the legislation, primarily concerning the potential for increased sales tax rates to disproportionately impact low-income citizens. While the bill aims for revenue neutrality, skeptics of the plan warn that relying exclusively on sales tax could lead to budget shortfalls during economic downturns when consumer spending declines. Furthermore, there is debate about the long-term sustainability of this revised tax approach and its ability to fund essential state services adequately.