FISCAL NOTE
Date Requested: March 14, 2017
Time Requested: 01:03 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2740 |
Introduced |
HB2985 |
|
|---|
| CBD Subject: |
Municipalities, Taxation |
|---|
|
FUND(S):
Local Governments
Sources of Revenue:
Other Fund local governments
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 give authority to municipalities to impose taxes on beer and nonintoxicating beer and to impose a tax on purchases of beer and nonintoxicating beer outside corporate limits of municipalities for benefit of counties and municipalities.
According to our interpretation, the proposed bill would allow a 5 percent tax on nonintoxicating beer sales for the benefit of local governments. The tax is structured in the same manner as the current local wine and liquor tax of the same rate and would not be collected from private clubs. As the current State tax on beer is imposed per barrel, an accurate estimate of beer sales in West Virginia is difficult. After consideration of approximate ounces sold per year and the range of average prices of beer, we estimate the proposed tax could yield up to $10.4 million in total for the benefit of all local governments. This estimate incorporates the potential for leakage in border communities and consumption changes as a result of the increased tax. For comparison, this local tax on sales of wine and liquor absent sales to private clubs yields approximately $8.5 million per year.
Additional costs incurred by the State Tax Department would be $20,000 in FY2018. No other costs are anticipated.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
20,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
20,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would allow a 5 percent tax on nonintoxicating beer sales for the benefit of local governments. The tax is structured in the same manner as the current local wine and liquor tax of the same rate and would not be collected from private clubs. As the current State tax on beer is imposed per barrel, an accurate estimate of beer sales in West Virginia is difficult. After consideration of approximate ounces sold per year and the range of average prices of beer, we estimate the proposed tax could yield up to $10.4 million in total for the benefit of all local governments. This estimate incorporates the potential for leakage in border communities and consumption changes as a result of the increased tax. For comparison, this local tax on sales of wine and liquor absent sales to private clubs yields approximately $8.5 million per year.
Additional costs incurred by the State Tax Department would be $20,000 in FY2018. No other costs are anticipated.
Memorandum
The stated purpose of this bill is to give authority to municipalities to impose taxes on beer and nonintoxicating beer and to impose a tax on purchases of beer and nonintoxicating beer outside corporate limits of municipalities for benefit of counties and municipalities.
The proposed bill contains a possible title defect. The heading of West Virginia Code §8-13-7 was not updated to include purchases of nonintoxicating beer. The language also refers to “beer” as well as “nonintoxicating beer.” Use of the latter would be consistent with other sections of Code and would add clarity to the interpretation.
As there is no effective date, the bill would be in effect 90 days from passage. This may not provide the Tax Department sufficient time to change forms and notify beer distributors and retailers.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov