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W.Va. not losing businesses over taxes, lawmakers told

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W.Va. not losing businesses over taxes, lawmakers told
By Eric Eyre, The Charleston Gazette-Mail
    
West Virginia Commerce Secretary Keith Burdette delivered a message Monday that many state lawmakers likely didn’t want to hear: Business taxes aren’t scaring away companies looking to expand operations in the Mountain State.

Legislators are eying possible cuts to taxes on businesses’ inventory, machinery and equipment, but Burdette said his office has never lost a single company it was recruiting because of those taxes.

“We don’t lose prospects over taxes,” Burdette told the Legislature’s Select Committee on Tax Reform. “We lose them over site. Our biggest challenge is the availability of sites that meet the needs and specifications of our prospects.”

Burdette said most business prospects shy away from West Virginia because of a shortage of flat land on which to build factories and other facilities. Less than 3 percent of land in the state is considered level. Several counties in West Virginia have no flat land.

Burdette said large companies such as Procter & Gamble – which announced plans to build a distribution center in Berkeley County earlier this year – wouldn’t have decided to locate in West Virginia if taxes on inventory and equipment were major issues.

“We couldn’t have attracted those guys with an unsolved problem,” Burdette said. “Procter & Gamble is the third largest consumer goods maker in the world. They’re going to pump out a huge amount of inventory.”

The company is planning a 1 million-square-foot facility that would employ 700 full-time workers at Tabler Station Business Park near Martinsburg.

Burdette said eliminating taxes on businesses’ inventory, machinery and equipment would harm public schools, which receive revenue from those taxes.

“These taxes specifically feed our education system,” he said.

Burdette acknowledged that the business taxes weren’t “optimal” and can be “a little cumbersome,” but “we haven’t lost anybody over it.”

Economic development officials typically offer special tax breaks and other incentives to business prospects to overcome any obstacles caused by the inventory and machinery taxes, Burdette said.

“Every single state in the U.S., regardless of their tax burden, offers a package of incentives and tax credits designed to encourage expansions, new investments and jobs,” he said.

Over the past decade, West Virginia has cut other business taxes. The corporate net income tax has dropped from 9 percent to 6.5 percent. The business franchise tax has been eliminated.

In a recent CNBC article, West Virginia ranked 49th for its overall business climate. But Burdette noted the state finished seventh in a category called “cost of doing business,” which took into account a state’s “competitiveness of tax climate.”

Burdette warned state lawmakers they’d be making a mistake if they target only taxes as a way to lure new companies to West Virginia. The state also must improve transportation systems, technology and workforce training, he said.

“Creating a truly attractive business climate cannot be limited to one factor,” Burdette said. “In fact, relying on one factor to the detriment of another could do more harm in this state than good.”

State lawmakers who serve on the tax reform committee are meeting monthly. They’re expected to take up changes to state tax laws when the legislative session starts in January.