July 4, 2007

West Virginia Taxes Celebrations of Independence from Taxation

by Alicia Hansen

The Fourth of July may be a celebration of  independence from unfair taxation, but in West Virginia, celebrations of Independence Day will be subject to an unfair tax: the fee that each business owner must pay (and most likely pass on to the consumer) in order to sell "sparklers and novelties."

While fireworks are illegal in the state, this annual fee applies to a detailed list of items often used at holiday celebrations, especially the Fourth of July. They include the following (from the West Virginia Tax Department): 

• Wire sparkler consisting of wire or stick coated with a nonexplosive pyrotechnic mixture of 100 grams or less per item, that produces a shower of sparks upon ignition
• Snake and glow worms composed of pressed pellets of a pyrotechnic mixture that produce a snake-like ash when burning
• Trick noisemakers which produce a small report designed to surprise the user
• Other sparkling devices which emit showers of sparks and sometimes a whistling or crackling effect when burning, do not detonate or explode, are hand-held or ground-based, cannot propel themselves through the air and contain not more than 75 grams of chemical compound per tube, or not more than a total of 200 grams if multiple tubes are used

A description of the fee, from the West Virginia code:

The tax commissioner shall establish an annual "Sparkler and Novelty Registration Fee" which shall be charged all businesses licensed to do business in the state of West Virginia desiring to sell sparklers and novelties authorized for sale in section twenty-three, article three, chapter twenty-nine of this code. This fee shall run concurrent with the business registration certificate set forth in section five of this article. This fee shall not be prorated. Each business shall pay fifteen dollars for each registration and shall be issued a sticker or card by the tax commissioner to be posted in a conspicuous position at the location of the business which has paid the registration fee. This fee shall be collected for each separate location where sparklers and novelties are sold.

This fee violates the principle of economic neutrality, which requires taxes to be levied on a broad base at low rates, rather than at high rates on particular industries, services or products. These sparklers and novelties are already subject to the sales tax, so there is no justification for the added fee.

Something for Fourth of July revelers to contemplate while enjoying their sparklers.