Virginia’s coal tax credits, some of the state’s largest economic incentives, “generate negligible economic benefits” and “no longer appear relevant” in a world where natural gas is rapidly displacing coal, the Joint Legislative Audit and Review Commission told legislators Monday morning ahead of the release of a new report on the efficacy of such incentives.
Virginia has had two coal tax credits on its books for the past few decades. The Coalfield Employment Enhancement Tax Credit, known as the coalfield tax credit, can be used by any coal-related company and was adopted in 1995 to make Virginia more competitive in the coal markets. The Virginia Coal Employment and Production Incentive Tax Credit, known as the electricity generator tax credit, was first established in 1986 to encourage power plants to buy coal for electricity generation.
Monday’s JLARC report recommends the General Assembly eliminate both.
Between fiscal year 2010 and fiscal year 2018, Virginia spent about $315 million on the tax credits, but JLARC estimated they generated fewer than 10 jobs, less than $1 million in state GDP and less than $1 million in personal income for every $1 million Virginia spent on them.
By comparison, JLARC Chief Economic Development and Quantitative Analyst Ellen Miller said the median benefits generated by state incentives are 60 jobs, $10 million in state GDP and $5 million in person income per $1 million spent by the state.
Overall, JLARC estimated that between 2010 and 2018, “the Virginia economy lost 35 jobs, $21 million in Virginia GDP, and $5 million in personal income because of the credits.”
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