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Location: Parkersburg, West Virginia, United States

A West Virginian by choice, a layman with no higher education. Just your average WVian who feels it is time normal people get involved and try to bring about the fundamental changes necessary to make West Virginia and the Nation all it can be. I will watch the issues plaguing West Virginia and the rest of the country and try to offer a perspective that is not available anywhere else. A Layman’s point of view. Email: PDNotrah@suddenlink.net I invite your candid comments and may even reply.

Thursday, July 07, 2005

Rewarding with Tax Increases

It is great that West Virginia is experiencing budget surpluses in such a magnitude as that explained in the July 6, front page article. What I find most interesting is that $86 million of the surplus or nearly 25% came from the natural resource industries that paid $248 million in taxes compared to the $162 million the tax department was expected it to pay. The additional tax revenue from natural resources came as a result of higher than normal prices being received for commodities such as coal, oil, gas and timber.

What is troubling is that although the industries paid what amounts to a 53 percent increase in taxes on extracted products, the Governor and our legislature saw fit in a 2005 special session of the legislature to add yet another tax burden on the these industries that will go into effect later this year which will be paid in addition to the taxes that resulted in surplus. A tax system that was already adequately able to automatically capture greater revenues in a high price environment was not enough. As consumer’s, we can expect to see higher utility rates in the future in part because of these additional taxes. Electric rates will rise as will the gas commodity rates applied to the already increasing rates consumers are already over burdened with.

West Virginia producers of coal, oil and gas were already paying taxes at much higher rates than any producers in contiguous states. What results is, although West Virginia enjoys a great wealth of resources, the tax burden placed on these industries causes a competitive disadvantage and results in higher prices for consumers.

Mining coal and drilling wells costs an enormous amount of money and requires great sums of capital that often takes years to pay out. These industries are labor intensive which means jobs for many West Virginians in the extractive industry. Making mountain state businesses pay taxes that their competitor’s are not forced to pay in other states will result in less capital, jobs and tax revenue in the future. We can not tax ourselves into prosperity. We should be creating incentives for our businesses that help them compete, not putting obstacles in the way.

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