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New city sales taxes swelling local coffers in Huntington

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Huntington implemented its new sales tax under the Municipal Home Rule Pilot Program. Huntington implemented its new sales tax under the Municipal Home Rule Pilot Program.

By JAMES E. CASTO
For The State Journal

The first quarter of the City of Huntington's 2013-2014 fiscal year saw the city's new one percent sales tax yield about a third more revenue than had been projected. Now the City of Charleston is hoping its own half-cent sales tax, which took effect Oct. 1, will yield similarly positive results. 

Both Huntington and Charleston implemented their new sales taxes after they were authorized to do so under the Municipal Home Rule Pilot Program enacted by the West Virginia Legislature. The program gives a handful of state cities more control over their finances and operations.

In Huntington, the impressive performance by the new sales tax in the first quarter of the fiscal year prompted City Council to tack an additional $917,300 on to the estimate of what the tax is expected to generate for the full year. That change means the sales tax is now slated to generate a total of $6.43 million this fiscal year.

If the projection holds true, it would make the sales tax Huntington's second-largest source of revenue behind the business and occupation tax.

The sales tax was part of a tax reform package enacted by Huntington City Council. Under the package, the business and occupation tax was eliminated for manufacturers and reduced by half for retailers and service-based businesses. Originally, the package also included an occupation tax but that was eliminated in the face of a court challenge.

Huntington Mayor Steve Williams said the tax changes will make the city more attractive from an economic development standpoint and spread the tax burden across a broader base.

Williams attributed the robust results for the new sales tax to the state Tax Department, which collects the tax on behalf of the city and has more significant collection and auditing powers.

In Charleston, shoppers had to begin digging a little deeper into their pockets as of Oct. 1 when merchants began collecting the city's half-cent per dollar sales tax. Charleston hopes to collect more than $6 million a year from the sales tax, with the money earmarked for up to $50 million of improvements at the city's aging Civic Center.

Wheeling also began collecting a half-cent sales tax on Oct. 1, with the proceeds expected to go to improvements at the city's WesBanco Arena. City leaders predict Wheeling will garner $1.4 million a year from the new tax.

Some small towns in West Virginia also are enacting local sales taxes through a provision in state tax law that allows non-home-rule cities or towns to charge a sales tax if they don't have — or if they agree to eliminate — business and occupation taxes on retailing.

In Huntington, Charleston and Wheeling, officials say implementing the new municipal sales tax has been relatively smooth, with few problems.

Still, the new tax has not been without problems. Some merchants located outside the corporate limits of the cities implementing the tax have been incorrectly charging customers the tax until the State Tax Department has stepped in and directed them to stop doing so.