FISCAL NOTE

Date Requested: February 10, 2021
Time Requested: 05:01 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1562 Introduced SB68
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Increases Revenue From Existing Sources, 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 increase the excise tax on cigarettes to $2.00 on each 20 cigarettes or in like ratio on any part thereof; and to increase the excise tax on sales of e-cigarette liquid at the rate of $1.00 per milliliter or fraction thereof, or if not sold, then at the same rate upon the use by the wholesaler or dealer. Per our interpretation, the proposed bill would increase the excise tax on cigarettes from $1.20 to $2.00 on each 20 cigarettes or in like ratio on any part thereof. In addition, the proposed bill would increase the excise tax on sales of e-cigarette liquid from $0.075 per milliliter to $1.00 per milliliter or fraction thereof, or if not sold, then at the same rate upon the use by the wholesale or dealer. The bill, if passed, would become effective July 1, 2021. Based on our interpretation, the passage of the proposed legislation would increase General Revenue Fund collections by $70 million in FY2022 and by $65 million in FY2023. The increase in collections would continue to decline in the out years due to decreasing consumption. Additional administrative costs incurred by the Tax Department would be $35,000 in FY2021, $114,000 in FY2022 and $95,000 in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 35,000 114,000 95,000
Personal Services 0 100,000 85,000
Current Expenses 0 10,000 10,000
Repairs and Alterations 0 0 0
Assets 0 4,000 0
Other 35,000 0 0
2. Estimated Total Revenues 0 70,000,000 65,000,000


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


Per our interpretation, the proposed bill would increase the excise tax on cigarettes from $1.20 to $2.00 on each 20 cigarettes or in like ratio on any part thereof. In addition, the proposed bill would increase the excise tax on sales of e-cigarette liquid from $0.075 per milliliter to $1.00 per milliliter or fraction thereof, or if not sold, then at the same rate upon the use by the wholesale or dealer. The bill, if passed, would become effective July 1, 2021. Based on our interpretation, the passage of the proposed legislation would increase General Revenue Fund collections by $70 million in FY2022 and by $65 million in FY2023. The increase in collections would continue to decline in the out years due to decreasing consumption. Additional administrative costs incurred by the Tax Department would be $35,000 in FY2021, $114,000 in FY2022 and $95,000 in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to increase the excise tax on cigarettes to $2.00 on each 20 cigarettes or in like ratio on any part of 20 cigarettes. The tax on other tobacco products remains unchanged at 12 percent of the wholesale price. The bill raises the tax on e-cigarette liquid from 7.5 cents to $1.00 per milliliter or fraction thereof. The changes are effective July 1, 2021. The bill deletes the current effective date and rate of the tax. This is problematic when collecting, administering, and enforcing the tax. Delinquent or unreported taxes prior to July 1, 2021 may be more difficult to collect and enforce. On the face of the amended bill, it would appear that the tax on cigarettes and e-liquid began on July 1, 2021.



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