FISCAL NOTE
Date Requested: April 01, 2021
Time Requested: 04:56 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2634 |
Comm. Sub. |
SB550 |
|
|---|
| CBD Subject: |
Taxation |
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|
FUND(S):
County Governments
Sources of Revenue:
Other Fund County Governments
Legislation creates:
Creates New 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 allow counties to implement a consumer sales tax of up to one percent in certain circumstances.
According to our interpretation, effective July 1, 2021, the bill would allow counties to impose and collect a county sales and use tax of one percent. The tax would require approval by a majority of the members of their county commission and a public hearing prior to consideration of the new tax. The county sales and use tax would not be applicable to any incorporated area within the county, regardless of whether the incorporated area imposed a municipal tax. In addition, the county tax would not be imposed on sales of motor fuel or motor vehicles.
Any county which imposes the tax is required to use the services of the Tax Commissioner to administer, enforce, and collect the tax. Counties would also be required to notify the Tax Commissioner at least 180 days before the effective date of the imposition of the tax or of any change in the rate of tax. The bill authorizes the Tax Commissioner to retain a fee of up to 5 percent to be deposited into the Local Sales Tax and Excise Tax Administration Fund.
According to our interpretation, there would be no impact to the General Revenue Fund. However, if all counties imposed the one percent county sales tax, the tax would generate roughly $100 million in revenue annually.
Additional administrative costs incurred by the State Tax Department would be $40,000 in FY2021, $154,500 in FY2022, $150,000 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 |
40,000 |
154,500 |
150,000 |
| Personal Services |
0 |
150,000 |
150,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
4,500 |
0 |
| Other |
40,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
100,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, effective July 1, 2021, the bill would allow counties to impose and collect a county sales and use tax of one percent. The tax would require approval by a majority of the members of their county commission and a public hearing prior to consideration of the new tax. The county sales and use tax would not be applicable to any incorporated area within the county, regardless of whether the incorporated area imposed a municipal tax. In addition, the county tax would not be imposed on sales of motor fuel or motor vehicles.
Any county which imposes the tax is required to use the services of the Tax Commissioner to administer, enforce, and collect the tax. Counties would also be required to notify the Tax Commissioner at least 180 days before the effective date of the imposition of the tax or of any change in the rate of tax. The bill authorizes the Tax Commissioner to retain a fee of up to 5 percent to be deposited into the Local Sales Tax and Excise Tax Administration Fund.
According to our interpretation, there would be no impact to the General Revenue Fund. However, if all counties imposed the one percent county sales tax, the tax would generate roughly $100 million in revenue annually.
Additional administrative costs incurred by the State Tax Department would be $40,000 in FY2021, $154,500 in FY2022, and $150,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to allow counties to implement a consumer sales tax of up to one percent in certain circumstances.
The 180-day notice to the Tax Commissioner applies to the imposition of the tax or a change in the rate of tax. This is somewhat confusing as the tax rate is set by the language of the current version of the bill at “one percent”. The introduced version of the bill permitted a sales tax of “up to one percent”.
Subsequent annexation or de-annexation are not addressed. It is foreseeable that disputes could arise where an incorporated area, with or without a municipal tax, annexes an area with a concentration of businesses resulting in a loss of revenue to the county. No process for settling such a dispute is set forth.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov