WV Center on Budget and Policy > Blog > Budget > Alternative Fuel Tax Credit Isn’t the State’s Only Tax Giveaway

Alternative Fuel Tax Credit Isn’t the State’s Only Tax Giveaway

This weekend’s Charleston Gazette included another article lamenting the lost revenue from the alternative vehicle tax credit. When the tax credit was scaled back this past legislative session, it resulted in a rush of people claiming the credit before they become ineligible, pushing up its cost. Now, Deputy Revenue Secretary Mark Muchow thinks that the tax credit may eventually cost the state $100 million.

Muchow claims that the tax credit caught the department by surprise, since the fiscal note they prepared for the original bill did not reflect changes to the final bill, nor did they expect an increase in claims from its pending repeal, since they anticipated it to save the state $10 million (perhaps some fiscal note reform is in order).

While the revenue loss from the alternative vehicle tax credit has garnered plenty of attention lately, Ken Ward, Jr. of the Gazette asks why isn’t the state media concerned about other tax policies that cost the state just as much in revenue each year. Ward highlights the tax preference for thin-seam coal, which enjoys a reduced severance tax rate. This tax expenditure cost the state $75 million in 2011 alone, and has been growing every year.

The state gives away millions in tax credits and incentives each year, that not only go unremarked on by the media, but by state officials themselves.  The problem is, not only do we not know how many or much is given away, we don’t know if the tax cuts are doing their job. West Virginia does very little to keep track of or evaluate its tax incentives. Considering the state’s track record when this lack of transparency is called to light, it’s a wonder that any action was taken to end the alternative vehicle tax credit.

Maybe the tax credit was too expensive to ignore, but $100 million over three years is still less than the $75 million per year from the thin-seam tax preference, or the $190 million per year that the cuts to the corporate net income and business franchise tax cuts will cost the state, and there is no sign of action on them, despite continuing budget problems.

Writing better fiscal notes, keeping better track of tax expenditures, and repealing them when they do too much harm to the state budget are all good things. But it makes little sense to go after one particular example, blame it for the state’s woes, and turn a blind eye to all the others.

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