FISCAL NOTE
Date Requested: January 24, 2023
Time Requested: 12:55 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2176 |
Introduced |
HB2958 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to create the West Virginia Business Incentive Program. The bill provides for a short title. The bill provides for legislative findings and purpose. The bill creates the program and sets forth qualifications. The bill sets forth a penalty for failure to keep records. The bill provides for rulemaking. The bill provides for the application of the West Virginia Tax Procedure and Administration Act and West Virginia Tax Crimes and Penalties Act to the West Virginia Business Incentive Program. Finally, the bill provides for an effective date.
This bill would provide for a 10 percent rebate on the payment of the amount of the annual growth of their business equipment and business inventory taxes for each additional job that is created during the year. The taxpaying business must meet the following criteria: shall be located in West Virginia and currently paying business equipment and/or business inventory taxes; must be in good standing with both county and state tax departments; the amount of annual W-2 forms shall determine the number of employees for both the previous and current year; the annual payroll must increase by 10 percent within the state; and at least 80 percent of the company’s employees must reside in the state.
According to the most recent Census data, there were roughly 98,000 firms operating in West Virginia, employing 1.4 million people. In the most recent year, local property taxes assessed on machinery and equipment and business inventory generated $213.9 million and $84.3 million, respectively. These tax collections are relatively stable from year to year. The costs of compliance and measurement of tax rebate for qualified businesses will be high relative to tax savings for individual businesses. We cannot reasonably estimate the revenue impact of this bill; however any loss would be likely minimal.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024 and $5,000 in subsequent years. The Department of Economic Development will also incur administrative costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
5,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would provide for a 10 percent rebate on the payment of the amount of the annual growth of their business equipment and business inventory taxes for each additional job that is created during the year. The taxpaying business must meet the following criteria: shall be located in West Virginia and currently paying business equipment and/or business inventory taxes; must be in good standing with both county and state tax departments; the amount of annual W-2 forms shall determine the number of employees for both the previous and current year; the annual payroll must increase by 10 percent within the state; and at least 80 percent of the company’s employees must reside in the state.
According to the most recent Census data, there were roughly 98,000 firms operating in West Virginia, employing 1.4 million people. In the most recent year, local property taxes assessed on machinery and equipment and business inventory generated $213.9 million and $84.3 million, respectively. These tax collections are relatively stable from year to year. The costs of compliance and measurement of tax rebate for qualified businesses will be high relative to tax savings for individual businesses. We cannot reasonably estimate the revenue impact of this bill; however any loss would be likely minimal.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024 and $5,000 in subsequent years. The Department of Economic Development will also incur administrative costs.
Memorandum
The stated purpose of this bill is to create the West Virginia Business Incentive Program. The bill provides for a short title. The bill provides for legislative findings and purpose. The bill creates the program and sets forth qualifications. The bill sets forth a penalty for failure to keep records. The bill provides for rulemaking. The bill provides for the application of the West Virginia Tax Procedure and Administration Act and West Virginia Tax Crimes and Penalties Act to the West Virginia Business Incentive Program. Finally, the bill provides for an effective date.
The requirement that businesses be located in West Virginia and that employees be West Virginia residents is vague and possibly impedes Interstate Commerce. It is not clear what is meant by “business equipment and/or business inventory taxes.” Presumably this refers to the personal property tax that is administered by the counties; a citation would be beneficial. It is not clear how the rebate would be claimed and against what taxes.
This article is effective for Corporation Net Income Tax and Personal Income Tax taxpayers retroactively to January 1, 2023. This language poses a problem because property tax cycles do not coincide with income tax cycles. In this context, it is not clear as to which tax type has the retroactive application.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov