|Photo by Emma Delk| Moundsville city council members at the Oct. 1 policy subcommittee meeting. From left, Vice Mayor David Wood, council member Randy Chamberlain and council member Judy Hunt.
Moundsville City Council is investigating reducing the business & occupation tax for new businesses to fill vacant lots within the city’s ON TRAC district, including Second through Fifth streets and Jefferson Avenue.
Mayor Sara Wood-Shaw proposed a B&O tax reduction for ON TRAC district businesses, a designation determined by the West Virginia Economic Development Office, during the Oct. 1 policy subcommittee meeting.
The plan is to reduce the B&O tax by 100% during the first year of the business, 50% in the second year, 25% in the third year and no reduction from the fourth year onwards.
Outside the ON TRAC district, Wood-Shaw proposed equating the number of permanent full-time employees a business has to a reduction in B&O tax. She gave council members two options for implementing the reduction.
For the first option, fewer than 10 employees would give a business no B&O tax reduction, 11 to 20 employees a 20% reduction, 21 to 30 employees a 40% reduction, 31 to 40 employees a 60% reduction, 41 to 50 employees an 80% reduction and any amount of employees at or above 51 would receive a 100% reduction.
For the second option, less than ten employees would give a business no reduction, 11 to 20 employees a 10% reduction, 21 to 30 employees a 20% reduction, 31 to 40 employees a 30% reduction, 41 to 50 employees a 40% reduction and any amount of employees at or above 51 would receive a 50% reduction.
Wood-Shaw noted the proposed tax incentives would supplement the city’s current tax exemptions for businesses. She added City Attorney Thomas White would have to “look into” the legality of designating certain areas to receive specific B&O tax incentives rather than implementing city-wide tax incentives.
“We just wanted to start this discussion so we could scratch these ideas or build upon them,” Wood-Shaw said. “This is just a starting point for us.”
According to Moundsville Codified Ordinance 745.151, Exemption For Businesses Locating In City, any service, manufacturing business or occupation subject to the B&O tax within city limits that locates or relocated to the city after 2023 shall be eligible for a 100% exemption from the application of this tax “if the business or occupation employs and retains at least 500 permanent full-time employees.” The exemption decreases by 20% for every 100 fewer employees a business has, beginning from 500 employees. The exemption applies for the first ten years a business is in the city.
Moundsville Codified Ordinance 745.152, Exemptions for Hotel Businesses Locating Within the City, provides an incentive specific to new hotels in the area. According to the ordinance, any newly constructed hotel within city limits that has 50 or more guests will be eligible for a one hundred percent 100% B&O tax exemption for six years after beginning business.
Council member Brianna Hickman supported the suggested incentives. She believed the phase-out system would be the “key” to the policy.
“It’s not that these businesses will never pay the taxes,” Hickman noted. “They just start to pay them through that incremental phase out.”
City Manager Rick Healy stressed that providing tax reductions for businesses with under 100 employees was “staying realistic” to the size of business that could operate within the area.
“We don’t have space to bring in a business that’s going to employ 500 people, so if we really want to make an impact, it’s going to have to be with a much lesser number of employees,” Healy said. “That’s why we went to the reductions, and the proposed numbers are flexible too.”
Council member Randy Chamberlain added that “small mom-and-pop shops” in the city should also receive tax incentives, particularly on Jefferson Avenue.
“When you’re starting out as a business, the most difficult years are usually the first two or three years,” Chamberlain said. “We need to include businesses that are mom-and-pop stores and give them incentives for those folks to get their foot in the door. Even if it’s one or two or three employees, that business will help us.”
Wood-Shaw outlined that any businesses in the ON TRAC district, including those on Jefferson Avenue, under the proposed ON TRAC business tax incentives, would pay no B&O tax for their first year “regardless of the number of employees.”
“I think this is a good thing and a way to encourage people to take that leap of faith,” Chamberlain said. “It’s a big step to open up a business today.”
Wood-Shaw agreed, noting there was “not a lot” the city could do regarding tax incentives “other than the B&O tax.”
“I think if we can do this, this would be something, as Randy said, that could encourage some of these folks that are thinking of starting a small business to maybe give it a go,” Wood-Shaw said.
