West Virginia House Bill HB5392

West Virginia 2024 Regular Session

• Introduced: 1/31/24
• Refer: 1/31/24

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

If enacted, HB5392 would significantly impact the state's taxation structure. By repealing multiple sections of the Code of West Virginia concerning motor fuel excise taxes, the bill shifts the reliance on fuel tax revenues to sales tax revenues instead. This alteration is expected to support working-class families by reducing their fuel expenses while also addressing the tax burdens on electric vehicle drivers, ensuring they contribute fairly through the increased sales tax. Additionally, this measure aims to attract more visitors to the state by offering lower fuel costs.

Summary

House Bill 5392 aims to eliminate the motor fuel excise tax in West Virginia, which is currently imposed at a flat rate of 20.50 cents per gallon for gasoline and diesel, and replace this with an equivalent increase in sales tax. The intention behind this legislative measure is to lower fuel prices for consumers, potentially promoting increased tourism and economic activity in the state. The bill proposes raising the sales tax rate to 7.8%, with a portion allocated to the state road fund, effectively maintaining revenue neutrality despite the removal of the fuel excise tax.

Sentiment

The discussions surrounding HB5392 have highlighted divided sentiments among lawmakers and the public. Proponents argue that eliminating the motor fuel excise tax will provide immediate financial relief to consumers, stimulate tourist traffic, and ensure long-term revenue growth that aligns with inflation trends. Critics raise concerns about the long-term sustainability of funding for transportation projects, as well as the potential rise in sales tax affecting low-income households disproportionately. These contrasting views showcase the ongoing debate about tax reform and its broader implications for West Virginia's economy.

Contention

One significant point of contention involves the trade-offs between eliminating the fuel excise tax and the consequences for transportation funding. While supporters claim the benefits in the form of enhanced tourism and relief for families, opponents caution against the heavy reliance on sales tax, which may not provide consistent funding for essential state infrastructure. The bill's future will depend on the balancing of immediate economic benefits against potential long-term financial and infrastructural consequences.