Legislators and the Manchin administration reached a compromise Thursday on a bill (SB465) to phase out the business franchise tax.

Under the compromise, the tax would be eliminated in 2015 - three years later than sponsors of the bill initially wanted.

Sen. Brooks McCabe, D-Kanawha, who brokered the compromise, said it would both eliminate what is widely considered the most unfair state business tax, and do it in a way that avoids unexpected budget deficits.

"We want to be as aggressive as possible with tax reductions, but to do it in a way that does not jeopardize the budget," he said.

Business groups point to the business franchise tax as a prime example of anti-business taxes in the state. The tax, calculated on a company's net worth, is imposed regardless of whether the company posts a profit or loss.

Last year, the Legislature passed a bill to scale back the tax - currently at 0.48 percent - each year until it reaches 0.21 in 2012.

Originally, the Senate bill called for the elimination of the tax entirely that year, but the Manchin administration raised concerns over the loss of $40 million to $50 million in revenue.

Under the compromise, adopted Thursday by the Senate Finance Committee, the rate stays at 0.21 for 2012 and 2013, drops to 0.1 percent in 2014, and is eliminated in 2015.

"It effectively gets rid of it in a way that keeps our other budget criteria in place," McCabe said.

Manchin spokeswoman Lara Ramsburg said the administration is pleased with the compromise.

"We want to applaud Senator McCabe for his responsible leadership on this issue," she said, "for looking at all the financial implications, and finding a way to take this tax to zero in the most responsible way possible."

The bill goes to the full Senate today.

To contact staff writer Phil Kabler, use e-mail or call 348-1220. 

Legislators and the Manchin administration reached a compromise Thursday on a bill (SB465) to phase out the business franchise tax.

Under the compromise, the tax would be eliminated in 2015 - three years later than sponsors of the bill initially wanted.

Sen. Brooks McCabe, D-Kanawha, who brokered the compromise, said it would both eliminate what is widely considered the most unfair state business tax, and do it in a way that avoids unexpected budget deficits.

"We want to be as aggressive as possible with tax reductions, but to do it in a way that does not jeopardize the budget," he said.

Business groups point to the business franchise tax as a prime example of anti-business taxes in the state. The tax, calculated on a company's net worth, is imposed regardless of whether the company posts a profit or loss.

Last year, the Legislature passed a bill to scale back the tax - currently at 0.48 percent - each year until it reaches 0.21 in 2012.

Originally, the Senate bill called for the elimination of the tax entirely that year, but the Manchin administration raised concerns over the loss of $40 million to $50 million in revenue.

Under the compromise, adopted Thursday by the Senate Finance Committee, the rate stays at 0.21 for 2012 and 2013, drops to 0.1 percent in 2014, and is eliminated in 2015.

"It effectively gets rid of it in a way that keeps our other budget criteria in place," McCabe said.

Manchin spokeswoman Lara Ramsburg said the administration is pleased with the compromise.

"We want to applaud Senator McCabe for his responsible leadership on this issue," she said, "for looking at all the financial implications, and finding a way to take this tax to zero in the most responsible way possible."

The bill goes to the full Senate today.

To contact staff writer Phil Kabler, use e-mail or call 348-1220.