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Best for business?

Local officials, businesses worried about sales tax hike

TRIADELPHIA — A Pennsylvania resident recently came to Howard’s Diamond Center at The Highlands to purchase a 4-carat diamond ring. He paid a lower sales tax rate than he would have in an Allegheny County neighborhood.

The ring cost more than $18,000. The current West Virginia consumer sales tax is 6 percent, adding about another $1,100 to the cost.

In Allegheny County and Pittsburgh, an additional 1 percent is added to the state’s base tax rate of 6 percent, bringing the tax to 7 percent. Sales tax on the same ring would have been approximately $1,300 there, so the drive to Triadelphia saved the buyer about $200.

This week West Virginia Gov. Jim Justice proposed cutting the state’s income tax rate by 60 percent. Among his proposals to make up the difference is a 1.9-percent increase in the state consumer sales tax.

That 7.9-percent wouldn’t be the ceiling for big-ticket luxury items under Justice’s proposal. The governor is suggesting an additional luxury tax for those items — 3 percent for items priced between $5,000 to $10,000, 2.75 percent for those costing between $10,000 to $30,000, down to 1 percent for items $1 million or more.

The $18,000 ring under Justice’s plan would ring up sales tax of $1,422 under a 7.9 percent sales tax, with the additional luxury tax adding about another $500. This would bring the tax on the ring to more than $1,900 — far more than the $1,300 in tax the ring-buyer would have paid in Pittsburgh.

Howard’s Diamond Center owner Howard Posin doesn’t see such customers making the trip to West Virginia to purchase items large or small if the tax goes into effect. He also expects those living locally will go elsewhere to shop.

“I’m not happy about it at all,” Posin said. “What happens is that the poor people pay it (the increased sales tax), and they’re the ones who need the money and shouldn’t be paying the higher taxes.

“Rich people are not paying (the income tax), and they have the money.”

Meanwhile, the 4-carat diamonds and other luxury jewelry sold in his store sit in his cases.

“You’re not going to sell it,” Posin said. “They’re going to buy it in another state. It’s that easy. In one hour, you can be in Pittsburgh, so business leaves West Virginia.”

Ohio County Commissioner Randy Wharton, also president of the Ohio County Development Authority, also is concerned businesses on West Virginia’s borders with other states will lose out in the deal.

“It puts us in a very bad position, and at a tremendous disadvantage with neighboring counties,” Wharton said. “What if $5,000 from a family is to go to buying a refrigerator, appliances…. a new television. It’s more tax.

“The people who spend the money and spend the sales tax are working people. This is an additional tax on working families.

“It won’t be good for The Highlands, and it won’t be good for the city of Wheeling. I will be surprised if any of this makes it through the legislature… You can watch your sales go away because of all the people traveling across the borders.”

The city of Wheeling imposes an additional 1 percent sales tax on purchases in the city, bringing sales tax in Wheeling currently to 7 percent.

The sales tax in Wheeling would be 8.9 percent under Justice’s proposal.

“Obviously, the sales tax increase is going to be more of a concern for border counties than for those centrally located in the state,” said Wheeling Mayor Glenn Ellliott, also a member of the Ohio County Development Authority. ”

“In the case of Wheeling and Ohio County generally, I would be very concerned about raising the sales tax to a point where you drive shoppers into Ohio or Pennsylvania. And it is therefore imperative that our legislators in Charleston consider the competitive effect of whatever tax changes they make.”

Due to Wheeling’s geographic location between Ohio and Pennsylvania, the area would lose sales, according to Elliott.

“I have concerns about what a 32-percent increase in our state consumer sales tax might mean for our current and future retail footprint,” he said. “I recognize that the impetus behind the governor’s proposal is a desire to attract outside investment and population into our state.

“But I can think of countless other reasons beside our state income tax why we have seen prolonged population loss in our region — most obviously our failure as a state to diversify our economy to reduce our relative dependence on fossil fuel extraction.”

If the state truly wants to reverse population loss, Elliott said it should make critical investments in infrastructure, in broadband and in education and workforce training.

“And communities need to be laser-focused on improving local quality of life to attract the type of workers that 21st-century industries demand,” he said. “Shifting the tax burden more towards a regressive tax like the sales tax is not, in and of itself, going to change our destiny.”

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