By Mike Kerman and Open Weaver Banks
The West Virginia Supreme Court held that a credit for taxes paid to other states on purchases of motor fuel is constitutional only if interpreted to include taxes paid to subdivisions of other states. The court determined that a credit that applies only to taxes paid to other states, and not localities, would violate both the fair apportionment and discrimination prongs of the U.S. Supreme Court’s Complete Auto test. If the court did not interpret the credit to include local taxes, a taxpayer who purchased motor fuel in a state without a local tax, or a taxpayer who purchased motor fuel in-state, would have a lower overall tax burden than a taxpayer who purchased motor fuel subject to a state and local tax. This would create a total tax burden on interstate commerce that is higher than an intrastate transaction, and therefore discriminate against interstate commerce. Although the statute’s terms apply only to allow a credit for taxes paid to other states, the court interpreted it to apply to local taxes as well, to avoid an unconstitutional application. No. 15-0935.