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Gas tax takes 1 cent hike in 2014

Jan. 01, 2014 @ 08:54 AM

HUNTINGTON -- Gas prices rise and fall, but motorists who fill up in West Virginia in 2014 are guaranteed to pay at least one additional cent per gallon above what they paid last year.

Starting Jan. 1, the wholesale sales tax on gasoline in the Mountain State will be 15.2 cents per gallon, up from 14.2 in 2013, according to West Virginia Revenue Department Deputy Secretary Mark Muchow.

In addition to the wholesale tax, a flat state tax of 20.5 cents and a federal tax of 18.4 cents go into the price of every gallon of gas motorists buy. In all, taxes will make up 54.1 cents of the price of a gallon of gas in West Virginia in the new year.

The wholesale tax is recalculated every year, based on the wholesale market price of fuel in November. That price was $2.83 per gallon in 2012, and $3.04 this past year, Muchow said.

The money from the tax goes to the state road fund.

"It provides the fund with a way to sort of hedge its bets against inflation," Muchow said. "Maybe not as much as the state would like, but the money does ultimately help to maintain roads and fill in potholes, and that's a good thing."

He estimated the wholesale tax will generate about $14 million in 2014.

When it comes to other fuel sources, taxes are dropping.

Because of a change in the law, propane is now considered an alternative fuel source. That means the tax per gallon of propane, which was the same as gasoline at 14.2 cents in 2013, will drop to 6.2 cents in the new year. That money also goes to the state road fund.

In other arenas, taxes are also dropping.

As part of a plan initiated in 2008, the corporate income tax rate will drop from 7.5 percent to 6.5 percent in 2014. That will cost the state about $8 million in revenue, Muchow said, but could help West Virginia in the long run.

"The objective of the policy makers is for the state to be more competitive in attracting business," he said. "A 6.5 percent rate puts us more in the middle in comparison with other states across the country."

The business franchise tax will drop from 0.2 percent to 0.1 percent, costing the state about $21 million. That tax cut is also the result of a plan initiated by former governor and current U.S. Sen. Joe Manchin.

Muchow said the state can afford to take the hits.

"You've seen in the past couple of years the elimination of the food tax," he said. "At one time, that tax generated $600 million for us."

Muchow said conservative budgeting combined with increases in coal severance funds and strong tax earnings from the natural gas market have allowed West Virginia to fill the void created by the reduction or elimination of other taxes.

"That's part of the reason you haven't seen new taxes," he said.

There is one new tax that takes effect New Year's Day, which is a sales tax on online retailers that have a physical presence in the state.

Many large online retailers, like Amazon, which has a call center in Huntington, have already been collecting the tax.

"It's just an effort to make sure that the sales tax is being collected," Muchow said of the new law.

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