Tax Breaks

It seemed to come as something of a shock to state officials that what did not seem like an expensive tax break, enacted with the best intentions, may end up costing West Virginians $100 million in lost revenue. But the episode brings to mind an old piece of advice – look before you leap.

It also raises a troubling question: How many more tax credit fiascoes are out there?

In case you missed it, the $100 million figure was mentioned last week in connection with a tax break legislators approved in 2011. It provided hefty income tax credits for individuals and businesses purchasing alternative fuel or hybrid vehicles.

Fortunately, at Gov. Earl Ray Tomblin’s suggestion, the Legislature revoked most of the program earlier this year. Now, only cars and trucks fueled by natural gas or propane will qualify.

But before the tax break could be gotten off the books, West Virginians in June and July had claimed $48 million in credits under it. Tax officials say the damage may rise to as much as $100 million.

That should be a concern to legislators. They may well want to rethink whether even natural gas or propane vehicle buyers should get tax credits.

Clearly, few involved in the process of enacting the tax credits were using their heads. Now, state government will either have to cut $100 million in services to West Virginians or raise more revenue to make up for the loss. Fortunately, no one in Charleston has suggested a tax increase.

Again, however, how many other tax credits and incentives, both local and state, are costing Mountain State residents more than they benefit us?

We hear of tax incentives all the time, often to bring new businesses to the state. They come in several forms.

Are the deals being monitored to ensure businesses involved keep up their ends of the bargains? Were the incentives out of balance with benefits to begin with?

Those are questions officials in both local and state governments should be investigating. We learned an important, expensive lesson last week. Ignoring it would be a big and possibly very costly mistake.