Aug. 2, 2010
Former Huntington Council Member Told Lawyers City Did Not Plan to Enact Occupation/Sales Tax
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – As Huntington City Council considers a tax reform package that would partially shift the burden from businesses to individuals, a few questions occur. For instance, in a 2009 Home Rule for Huntington presentation, Dr. Calvin Kent, Marshall University Center for Business and Economic Research, indicated the city “had no plans” to enact either the occupation or city sales tax.
In fact, the presentation stressed the need for specific conditions prior to implementation and/or consideration.
As part of a presentation to the West Virginia Law Institute, Dr. Kent, a former city councilman, stated that the WV Constitution grants cities “less power and freedom than in any other state,” leaving “little discretion for cities in raising revenue … unless that power is specifically granted by the legislature.”
The presentation stated that SB 747 (2007) which established the Municipal Home Rule Project would be a pilot program to “establish a framework for municipalities within which new ideas can be explored to see if they can or should be implemented on a statewide basis. Plans must address laws, policies, rules or regulations that prevent the municipality to carry out duties in the most cost effective, efficient and timely manner.”
Although Huntington and other pilot cities have Home Rule authorization , the Kent presentation to the WV Law Institute stated “any ordinances, acts, resolutions, rules and regulations NOT contrary to the constitutions of the United States or West Virginia…”
In addition, the presentation reminded of constitutional limitations on city ordinances and charters i.e. they cannot be “inconsistent or in conflict with this constitution.”
The Center for Business and Economic Research listed Huntington’s four proposals: Land Bank fast tract authority; Local Options to Address Fire Damage; Increased Capacity to collect fees/taxes; and municipal occupation/retail sales tax.
A REVERSAL FROM THE PRESENTATION
However, Kent’s presentation stated that Huntington “has not enacted and currently has no plans to [enact]” either the local occupation or the sale tax.
But, if considered, the occupation tax revenue would eliminate the City Service (User) Fee ($3 per week) and reduce B & O tax on retail business.
As for the local retail sale tax, the presentation indicated it would “piggyback” on State tax, but concluded it “would not be feasible unless done countywide.”
Under the presentation the employer would withhold and remit the occupation tax to the city like federal and state personal income taxes. The state , according to the presentation, “would allow for JOINT audits.”
The presentation said the base would include salaries, wages, commissions, and other income meeting the IRS definition of “Adjusted Gross Income.” Excluded from the base: Intangible income, net business profits , and any other form of income.
FOLLOW SURROUNDING STATES
As HNN has reported, surrounding states have various forms of occupation or earning taxes. Over 200 Ohio cities have adopted the tax which cities and school districts can levy up to one percent. (Rate increases require voter approval). Many of Kentucky’s larger cities have the tax , which ranges from 0.25-2.25%. Kent described it as a “major source of revenue for over half of the cities.”
Pennsylvania has a “local earned income tax” which can be used by cities and school districts. The 1% base can be exceeded only in home rule cities. In Maryland, all 23 counties and Baltimore levy income taxes from 1.25 to 3.2% which is piggybacked on the state income tax.
Intriguingly, the study states that Virginia has authorized local income taxes on both business and individuals (limited for transportation needs), but no city has adopted the tax. A referendum on such a tax, if enacted, is required every five years.
(To view the PDF presentation, click: http://www.marshall.edu/cber/research/HomeRuleForHuntington.pdf)
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Former Huntington Council Member Told Lawyers City Did Not Plan to Enact Occupation/Sales Tax
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – As Huntington City Council considers a tax reform package that would partially shift the burden from businesses to individuals, a few questions occur. For instance, in a 2009 Home Rule for Huntington presentation, Dr. Calvin Kent, Marshall University Center for Business and Economic Research, indicated the city “had no plans” to enact either the occupation or city sales tax.
In fact, the presentation stressed the need for specific conditions prior to implementation and/or consideration.
As part of a presentation to the West Virginia Law Institute, Dr. Kent, a former city councilman, stated that the WV Constitution grants cities “less power and freedom than in any other state,” leaving “little discretion for cities in raising revenue … unless that power is specifically granted by the legislature.”
The presentation stated that SB 747 (2007) which established the Municipal Home Rule Project would be a pilot program to “establish a framework for municipalities within which new ideas can be explored to see if they can or should be implemented on a statewide basis. Plans must address laws, policies, rules or regulations that prevent the municipality to carry out duties in the most cost effective, efficient and timely manner.”
Although Huntington and other pilot cities have Home Rule authorization , the Kent presentation to the WV Law Institute stated “any ordinances, acts, resolutions, rules and regulations NOT contrary to the constitutions of the United States or West Virginia…”
In addition, the presentation reminded of constitutional limitations on city ordinances and charters i.e. they cannot be “inconsistent or in conflict with this constitution.”
The Center for Business and Economic Research listed Huntington’s four proposals: Land Bank fast tract authority; Local Options to Address Fire Damage; Increased Capacity to collect fees/taxes; and municipal occupation/retail sales tax.
A REVERSAL FROM THE PRESENTATION
However, Kent’s presentation stated that Huntington “has not enacted and currently has no plans to [enact]” either the local occupation or the sale tax.
But, if considered, the occupation tax revenue would eliminate the City Service (User) Fee ($3 per week) and reduce B & O tax on retail business.
As for the local retail sale tax, the presentation indicated it would “piggyback” on State tax, but concluded it “would not be feasible unless done countywide.”
Under the presentation the employer would withhold and remit the occupation tax to the city like federal and state personal income taxes. The state , according to the presentation, “would allow for JOINT audits.”
The presentation said the base would include salaries, wages, commissions, and other income meeting the IRS definition of “Adjusted Gross Income.” Excluded from the base: Intangible income, net business profits , and any other form of income.
FOLLOW SURROUNDING STATES
As HNN has reported, surrounding states have various forms of occupation or earning taxes. Over 200 Ohio cities have adopted the tax which cities and school districts can levy up to one percent. (Rate increases require voter approval). Many of Kentucky’s larger cities have the tax , which ranges from 0.25-2.25%. Kent described it as a “major source of revenue for over half of the cities.”
Pennsylvania has a “local earned income tax” which can be used by cities and school districts. The 1% base can be exceeded only in home rule cities. In Maryland, all 23 counties and Baltimore levy income taxes from 1.25 to 3.2% which is piggybacked on the state income tax.
Intriguingly, the study states that Virginia has authorized local income taxes on both business and individuals (limited for transportation needs), but no city has adopted the tax. A referendum on such a tax, if enacted, is required every five years.
(To view the PDF presentation, click: http://www.marshall.edu/cber/research/HomeRuleForHuntington.pdf)
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