FISCAL NOTE

Date Requested: February 11, 2016
Time Requested: 02:42 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1194 Introduced HB4497
CBD Subject: Roads and Transportation, Tax


FUND(S):

General Revenue Fund, State. Road Fund

Sources of Revenue:

General Fund,Other Fund State Road Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to provide for sales taxes collected on sales of automobile parts to be deposited into the State Road Fund.
    
    Based on our interpretation, the proposed bill would transfer roughly $35.8 million per year in sales tax collections on sales of automobile parts from the General Revenue Fund to the State Road Fund for the first full year of implementation. Because the stated effective date is January 1, 2017, a partial-year transfer of approximately $14.9 million is anticipated in FY2017, accounting for the lag in sales tax collections and assuming State Road Fund transfers would occur in the same month collections were received. Further, it is assumed that the transfer would be based on an estimate rather than imposing a burdensome requirement for vendors to separately report such sales tax on tax returns.
    
    Additional costs incurred by the State Tax Department are expected to be $11,270 for the remainder of FY2016 and $25,000 in FY2017 and for each year thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 11,270 25,000 25,000
Personal Services 0 25,000 25,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 11,270 0 0
2. Estimated Total Revenues 0 -14,900,000 -31,800,000


Explanation of above estimates (including long-range effect):


    Based on our interpretation, the proposed bill would transfer roughly $35.8 million per year in sales tax collections on sales of automobile parts from the General Revenue Fund to the State Road Fund for the first full year of implementation. Because the stated effective date is January 1, 2017, a partial-year transfer of approximately $14.9 million is anticipated in FY2017, accounting for the lag in sales tax collections and assuming State Road Fund transfers would occur in the same month collections were received. Further, it is assumed that the transfer would be based on an estimate rather than imposing a burdensome requirement for vendors to separately report such sales tax on tax returns.
    
    The fiscal note table includes only the impact on the State General Revenue Fund. The increase in State Road Fund revenues would come at the expense of the General Revenue Fund.
    
    Additional costs incurred by the State Tax Department are expected to be $11,270 for the remainder of FY2016 and $25,000 in FY2017 and for each year thereafter.
    



Memorandum


    The stated purpose of this bill is to provide for sales taxes collected on sales of automobile parts to be deposited into the State Road Fund.
    
    The proposed bill does not define “automobile parts,” which could introduce compliance confusion and difficulty in administering the tax. Given that Code does define “motor vehicle,” it is unclear whether “automobile” may have a separate meaning. Administration of the tax would be difficult as vendors would have to report the sales of automobile parts separately from other sales. This will require form and programming changes, among others, for the Tax Department.
    
    The bill does not state whether any municipal sales taxes collected on the sale of automobile parts at the local level would also be dedicated to the State Road Fund. Similarly, dedication of collections from sales within Municipal and County Economic Opportunity Development Districts is not explicitly stated.
    
    The bill does not state how frequently deposits are made into the State Road Fund and does not establish a holding account or similar for funds. Depending on when funds are transferred, and whether refunds are issued after transfers occur, could impose a burden on General Revenues.
    
    The bill appears to have a title defect, as it does not specify an effective date.
    
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov