FISCAL NOTE
Date Requested: January 28, 2026
Time Requested: 04:49 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3161 |
Introduced |
SB639 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
General Revenue Fund, Emergency Medical Service Agency Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses, Creates New Fund: Emergency Medical Service Agency Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to levy a $1 user fee on cigarettes; provide the use fee to be directed to support Emergency Medical Services; and create a special revenue fund to receive funds from the created user fee.
According to our interpretation, the proposed legislation would add a definition for “Electronic smoking device” and update the definition of “other tobacco product” or “tobacco products other than cigarettes” to include electronic smoking devices and any component or accessory used in the consumption of a tobacco product. The proposed legislation also adds two new sections to W. Va. Code §16-4C, the “Emergency Medical Services Act”. The new sections create a special revenue fund the “Emergency Medical Service Agency Fund” and a county user fee for eligible counties that provide emergency medical services. The user fee would be levied on the sale of cigarettes at a rate of $1.00 on each twenty cigarettes or in like ratio on any part thereof.
The definition of “Electronic smoking device” includes “…any component, part, or accessory of such a device, whether or not sold separately, and includes any substance intended to be aerosolized or vaporized during the use of the device…”. Therefore, there is potential for e-cigarette liquid to be taxed at twelve percent of wholesale as other tobacco products and at 7.5 cents per milliliter as e-cigarette liquid.
Assuming that all counties participate and impose the “user fee” on cigarettes, the average price of a pack of cigarettes in West Virginia would increase to $9.75. This price would be significantly higher than the average price in three neighboring states. If e-cigarette liquid is subject to double taxation as both other tobacco products and e-cigarette liquid, the increase would likely cause the West Virginia excise tax rate on these products to be significantly higher than rates in most neighboring states. Currently, West Virginia Tobacco Products Tax collections benefit from an outflow of cigarettes, and some other products, to surrounding states with higher taxes. The increase in the cost of certain tobacco products in West Virginia would cause a decline in usage in the state, a decline in smuggling to higher tax states, and an increase in smuggling from lower tax states.
Per our interpretation, passage of this bill would reduce General Revenue Fund collections attributable to the excise tax on cigarettes by up to $12 million in FY2026, $15 million in FY2027 and by decreasing amounts in subsequent fiscal years.
The General Revenue Fund impact related to changes in the taxation of e-cigarette devices and e-cigarette liquid would be dependent on whether the e-cigarette liquid is taxed as other tobacco products or as e-cigarette liquid. If electronic smoking devices were taxed the same as other tobacco products and e-cigarette liquid continued to be taxed at 7.5 cents per milliliter, General Revenue collections attributable to e-cigarettes would increase by up to $2.4 million in FY2026 and by increasing amounts in subsequent fiscal years.
Assuming that all counties participate and impose the “user fee” on cigarettes, the “user fee” would generate up to $75 million for the Emergency Medical Service Agency Fund in FY2026, $91 million in FY2027, and decreasing amounts in subsequent fiscal years. The bill provides that the user fee may be imposed only by those counties who impose an operational emergency medical services levy. Currently, less than twenty counties impose a specific excess property tax levy for emergency services.
Additional administrative costs incurred by the State Tax Department would be $51,150 in FY2026 and $49,550 per year in FY2027 and thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
51,150 |
49,550 |
49,550 |
| Personal Services |
0 |
49,550 |
49,550 |
| Current Expenses |
1,650 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
49,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-9,600,000 |
-12,600,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed legislation would add a definition for “Electronic smoking device” and update the definition of “other tobacco product” or “tobacco products other than cigarettes” to include electronic smoking devices and any component or accessory used in the consumption of a tobacco product. The proposed legislation also adds two new sections to W. Va. Code §16-4C, the “Emergency Medical Services Act”. The new sections create a special revenue fund the “Emergency Medical Service Agency Fund” and a county user fee for eligible counties that provide emergency medical services. The user fee would be levied on the sale of cigarettes at a rate of $1.00 on each twenty cigarettes or in like ratio on any part thereof.
The definition of “Electronic smoking device” includes “…any component, part, or accessory of such a device, whether or not sold separately, and includes any substance intended to be aerosolized or vaporized during the use of the device…”. Therefore, there is potential for e-
cigarette liquid to be taxed at twelve percent of wholesale as other tobacco products and at 7.5 cents per milliliter as e-cigarette liquid.
Assuming that all counties participate and impose the “user fee” on cigarettes, the average price of a pack of cigarettes in West Virginia would increase to $9.75. This price would be significantly higher than the average price in three neighboring states. If e-cigarette liquid is subject to double taxation as both other tobacco products and e-cigarette liquid, the increase would likely cause the West Virginia excise tax rate on these products to be significantly higher than rates in most neighboring states. Currently, West Virginia Tobacco Products Tax collections benefit from an outflow of cigarettes, and some other products, to surrounding states with higher taxes. The increase in the cost of certain tobacco products in West Virginia would cause a decline in usage in the state, a decline in smuggling to higher tax states, and an increase in smuggling from lower tax states.
Per our interpretation, passage of this bill would reduce General Revenue Fund collections attributable to the excise tax on cigarettes by up to $12 million in FY2026, $15 million in FY2027 and by decreasing amounts in subsequent fiscal years.
The General Revenue Fund impact related to changes in the taxation of e-cigarette devices and e-cigarette liquid would be dependent on whether the e-cigarette liquid is taxed as other tobacco products or as e-cigarette liquid. If electronic smoking devices were taxed the same as other tobacco products and e-cigarette liquid continued to be taxed at 7.5 cents per milliliter, General Revenue collections attributable to e-cigarettes would increase by up to $2.4 million in FY2026 and by increasing amounts in subsequent fiscal years.
Assuming that all counties participate and impose the “user fee” on cigarettes, the “user fee” would generate up to $75 million for the Emergency Medical Service Agency Fund in FY2026, $91 million in FY2027, and decreasing amounts in subsequent fiscal years. The bill provides that the user fee may be imposed only by those counties who impose an operational emergency medical services levy. Currently, less than twenty counties impose a specific excess property tax levy for emergency services.
Additional administrative costs incurred by the State Tax Department would be $51,150 in FY2026 and $49,550 per year in FY2027 and thereafter.
Memorandum
The stated purpose of this bill is to levy a $1 user fee on cigarettes; provide the use fee to be directed to support Emergency Medical Services; and create a special revenue fund to receive funds from the created user fee.
The definition of “other tobacco product” or “tobacco products other than cigarettes” is modified under this bill to now include “electronic smoking devices”, which means that “any substance intended to be aerosolized or vaporized” will be taxed as an “other tobacco product” or a “tobacco product other than cigarettes”. It is likely that electronic cigarettes could be subject to both the tax in W.Va. Code §11-17-4b as well as the tax in W.Va. Code §11-17-3. Whether this double taxation is intended is not clear in this bill.
This bill states that the “user fee” is imposed “on and after July 1, 2025”. The “user fee” is thus effectively retroactive, and problems with imposing such a fee retroactively are not addressed.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov