Exactly how will Charleston charge a half-cent, anyway?
CHARLESTON, W.Va. - In the first half of the 19th Century, Charleston's proposed new city sales tax would have been a simpler matter.
In those days a patron could have paid with a half penny, a coin that was minted in the United States from 1793 until 1857, said Michael White, a spokesman for the U.S. Mint.
But now there is no such coin, and Mayor Danny Jones is seeking a tax of a half penny on the dollar.
So how does one pay a half penny? Remember third-grade math? Chances are the teacher mentioned rounding.
If the mayor's proposal is passed by the state Home Rule Board and city council, merchants collecting the sales tax will sometimes have to round up or down when ringing up the purchase, said Danny Forinash, public information officer with the West Virginia Tax Department.
Forinash emphasized that the city sales tax has not yet been approved, and the process for collecting the half-percent sales tax is "speculation" as of now.
However, the Tax Department is responsible for collecting the state sales tax, which also has to be rounded up or down depending on the amount of the purchase, Forinash said.
"We have some thoughts on how this would work if the sales tax is implemented," he said.
The department would collect the city sales tax revenue along with its own revenue and then send the city its share.
Jones hopes to finance $45 million to $60 million worth of renovations to the Charleston Civic Center with revenue from the new tax.
However, the 6.5 percent tax could end up costing patrons just a little bit more - or a little bit less - when they make purchases because it is impossible to collect a half penny.
For example, if a person purchased something for $1, they could end up paying 7 cents in sales tax because the 6.5 percent would have to be rounded up, Forinash said.
If the sale amount were 99 cents, then the sales tax would be rounded down to 6 cents because the total tax amount would be 6.4 cents, according to the formula.
For an item priced at $999.99, the customer might pay $65 in sales tax because $64.999 in sales tax would be rounded up.
However, even though the sales tax could be rounded up, the city would receive only 0.5 percent of the total sales tax collected. That's because the amount distributed by the state is based on the total sales in the municipal limits, Forinash said.
The state would not end up making more money, he said, because the instances of rounding up would be offset by instances of rounding down.
The Tax Department should have no problem collecting the extra tax if the proposal is implemented by Charleston, he said. The agency already collects sales taxes for three municipalities.
Huntington enacted a 1 percent citywide sales tax on Jan. 1, 2012.
Rupert, a small town in Greenbrier County, and Williamstown, Wood County, also have 1 percent taxes. Both of those towns enacted sales taxes in lieu of business and occupation taxes, Forinash said.
State code allows cities to levy sales taxes as long as they do not charge B&O taxes, he said.
However, Charleston is attempting to go the route of Huntington and enact the sales tax as part of its home rule powers.
Charleston Mayor Danny Jones said he knew that the half-cent sales tax would round up to a full penny in some instances. However, he still favors a half percent tax over a full percent.
"I don't think this is going to cause us any problems," Jones said.
Jones considers the proposed tax nominal, even if it does have to be rounded to a penny at certain price points, and he doubts it would adversely affect people's budgets.
Forinash said the rounding should cause merchants no trouble in collecting the tax.
Larger retailers would have the formula for calculating the tax programmed into their cash registers, and the machines would automatically round up or down, he said.
"If someone buys something at a smaller merchant's store, they'll have a chart posted somewhere to help them calculate the tax," Forinash said.