FISCAL NOTE

Date Requested: January 22, 2018
Time Requested: 11:50 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1119 Introduced HB4245
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue



Fiscal Note Summary


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


The stated purpose of this bill is to exempt wood furniture from state sales tax if seventy-five percent of the finished product is made from wood timbered in the state and the furniture is manufactured in the state. This bill would exempt the sale of wood furniture from the West Virginia Sales Tax if seventy-five percent of the finished product is from wood timbered in West Virginia and the furniture was manufactured in West Virginia. Based on our interpretation, the passage of the proposed legislation would result in a revenue loss of $100,000 per year. Additional administrative costs incurred by the State Tax Department would be minimal in FY2019. No additional administrative costs would be incurred in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 1,000 0
Personal Services 0 1,000 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -100,000 -100,000


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


This bill would exempt the sale of wood furniture from the West Virginia Sales Tax if seventy-five percent of the finished product is from wood timbered in West Virginia and the furniture was manufactured in West Virginia. Based on our interpretation, the passage of the proposed legislation would result in a revenue loss of $100,000 per year. Additional administrative costs incurred by the State Tax Department would be minimal in FY2019. No additional administrative costs would be incurred in subsequent fiscal years.  



Memorandum


The stated purpose of this bill is to exempt wood furniture from state sales tax if seventy-five percent of the finished product is made from wood timbered in the state and the furniture is manufactured in the state. As written, the bill may violate the Commerce Clause of the U.S. Constitution. The bill favors sales of furniture made in this state. The terms used in the bill are not clearly defined. Current code provides an exemption from sales tax for purchasers of lumber to be made into furniture, toys, collectibles and home furnishings. The exemption may be claimed for up to five consecutive years (W.Va. Code 11-15-9(a)(39).



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