FISCAL NOTE
Date Requested: February 24, 2021
Time Requested: 02:16 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1033 |
Introduced |
SB101 |
|
|---|
| CBD Subject: |
|
|---|
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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 authorize a tax credit for certain busines entities that invest in certain fresh food retailers located in underserved communities and similar areas.
According to our interpretation of this bill, the current Economic Opportunity Tax Credit would be expanded to allow a tax credit for qualified business entities that invest in certain fresh food retailers located in underserved communities and similar areas.
Even though the Economic Opportunity Tax Credit is available for qualified businesses who create new jobs, this proposed expansion of the tax credit would not require the creation of new jobs. The tax credit would equal 10 percent of the Taxpayer’s qualified investment in a “fresh food retail establishment.” The credit would apply over a 10-year period to reduce business income tax attributable to the qualified investment by up to 80 percent. We are not readily able to determine the revenue consequences to the State General Revenue Fund.
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2022.
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 |
0 |
5,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, the current Economic Opportunity Tax Credit would be expanded to allow a tax credit for qualified business entities that invest in certain fresh food retailers located in underserved communities and similar areas. Recent data from the United States Department of Agriculture (USDA) shows that roughly 320,000 people in West Virginia either live 20 miles from a rural supermarket or one mile from an urban supermarket. Roughly 110,000 people in this category are low-income West Virginians. In 2019, there were 2,072 food retailers in West Virginia and 39 percent of these food retailers were owned by businesses headquartered in West Virginia.
Even though the Economic Opportunity Tax Credit is available for qualified businesses who create new jobs, this proposed expansion of the tax credit would not require the creation of new jobs. The tax credit would equal 10 percent of the Taxpayer’s qualified investment in a “fresh food retail establishment.” The credit would apply over a 10-year period to reduce business income tax attributable to the qualified investment by up to 80 percent. We are not readily able to determine the revenue consequences to the State General Revenue Fund.
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2022.
Memorandum
The stated purpose of this bill is to authorize a tax credit for certain busines entities that invest in certain fresh food retailers located in underserved communities and similar areas.
There are some concerns with this bill. The term “underserved community” is undefined in this bill. This could be problematic if the issue of whether the area served by a tax credit claimant is indeed “underserved”.
This bill does not contain an effective date.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov