FISCAL NOTE
Date Requested: April 01, 2021
Time Requested: 04:54 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3519 |
Originating |
SB718 |
|
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to amend and reenact the Coal Severance Tax rebate. This includes defining terms, provide for rebate of Severance Tax when capital investment made in new machinery and equipment is directly used in severance of coal or in coal preparation and processing plants. The originating bill provides rules and procedures for claiming the rebate and transfers to successors and provides that changes clarifying application of rebate are to be applied retroactive to capital investments placed into service after the original effective date.
The proposed changes to the Coal Severance Tax rebate include adding repair costs to tangible personal property used in coal production as part of the qualified investment. Infrastructure upgrades to real property for direct use in coal production including materials used for construction of access roads, belt lines, and ventilation fans would also be added as part of the qualified investment for the expanded Coal Severance Tax rebate.
This bill also expands the base period for the calculation of the current Coal Severance Tax rebate. The proposed change to the base period of the tax rebate is a five-year annual average of the State portion of the eligible taxpayer’s Coal Severance Tax liability while, under the current law, the base period of the Coal Severance Tax rebate is either tax year 2018 or the second year of a two-year period of an eligible rebate recipient who produced coal for only two years before making the qualified investment in new machinery and equipment.
The aggregate total number of full-time employees along with full-time equivalent employees at all mines operated by an eligible tax rebate recipient would need to be increased above the annual average aggregate total number of full-time employees along with full-time equivalent employees in order to receive the Coal Severance Tax rebate. The amount of the rebate is 35 percent of the eligible taxpayer’s qualified investment while the maximum rebate is limited to 80 percent of the increase above the base period Coal Severance taxes. The proposed changes appear to expand the qualified investment eligibility while also increasing the requirements for coal production for the specific mine where the qualified investment was made, and all mines owned by the eligible tax rebate recipient. The proposed changes to the current law will have no fiscal impact to the General Revenue Fund in FY2023 and thereafter.
Additional administrative costs incurred by the State Tax Department would be $25,000 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 |
25,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
25,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The proposed changes to the Coal Severance Tax rebate include adding repair costs to tangible personal property used in coal production as part of the qualified investment. Infrastructure upgrades to real property for direct use in coal production including materials used for construction of access roads, belt lines, and ventilation fans would also be added as part of the qualified investment for the expanded Coal Severance Tax rebate.
This bill also expands the base period for the calculation of the current Coal Severance Tax rebate. The proposed change to the base period of the tax rebate is a five-year annual average of the State portion of the eligible taxpayer’s Coal Severance Tax liability while, under the current law, the base period of the Coal Severance Tax rebate is either tax year 2018 or the second year of a two-year period of an eligible rebate recipient who produced coal for only two years before making the qualified investment in new machinery and equipment.
The aggregate total number of full-time employees along with full-time equivalent employees at all mines operated by an eligible tax rebate recipient would need to be increased above the annual average aggregate total number of full-time employees along with full-time equivalent employees in order to receive the Coal Severance Tax rebate. The amount of the rebate is 35 percent of the eligible taxpayer’s qualified investment while the maximum rebate is limited to 80 percent of the increase above the base period Coal Severance taxes. The proposed changes appear to expand the qualified investment eligibility while also increasing the requirements for coal production for the specific mine where the qualified investment was made, and all mines owned by the eligible tax rebate recipient. The proposed changes to the current law will have no fiscal impact to the General Revenue Fund in FY2023 and thereafter.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2022.
Memorandum
The stated purpose of this bill is to amend and reenact the Coal Severance Tax rebate. This includes defining terms, provide for rebate of Severance Tax when capital investment made in new machinery and equipment is directly used in severance of coal or in coal preparation and processing plants. The originating bill provides rules and procedures for claiming the rebate and transfers to successors and provides that changes clarifying application of rebate are to be applied retroactive to capital investments placed into service after the original effective date.
The bill limits the rebate in a “given rebate year”. It is not clear if these limitations apply to carry-over years or the initial rebate grant.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov