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Tax policy change may create coal jobs

Last legislative session, tax writers were handed a 55-page report explaining how a change in revenue policy designed to provide incentives for state utilities to switch to coal mined in West Virginia would support upward of 200 jobs.

Last week, trying to track what happened to the report proved fruitless. Calls to office holders went unreturned and e-mails to state agencies lingered in inboxes.

The report, written by West Virginia University’s Bureau of Business and Economics, states in 2013, West Virginia consumers used 31 million tons of coal, of which nearly 13 million tons was imported from other states, about 41 percent.

The authors found if the state had a tax policy that encouraged in-state utilities to replace some or all of the imported coal with West Virginia-produced coal, it would potentially increase coal production by as much as 11 percent over the 113 million tons produced in 2013 and create up to 196 mining jobs.

“It’s somewhat surprising that in a known coal-producing state that our utilities are using coal imported from outside of West Virginia,” said John Deskins, director of the BBER and co-author of the study. “These policies would help the state recapture some of that demand for in-state coal producers.”

The report looks at two possible policy changes. The first is a $3 per ton credit on severance tax that would be passed along to utilities. The second is a 5 percent subsidy for the purchase of in-state coal that could be applied to electric utilities’ business and occupation taxes.

These two policy options, researchers said, would increase coal demand for West Virginia producers by approximately half a million tons a year and generate upward of $34 million in new economic activity.

The policies’ effectiveness is limited to a couple of factors. First, the policies that were considered require the tax subsidies would be applied only to coal above and beyond the base year in order to limit the impact on state revenue.

“By limiting the tax incentive to coal sold above the level in a base year, the tax policy would not lower taxes on coal that is already purchased or sold (on the open market). The tax policy incentives would only incentivize new coal sales or purchase that would not have taken place were the tax credit not in effect,” the report explains.

source: http://www.register-herald.com