FISCAL NOTE

Date Requested: January 11, 2023
Time Requested: 09:01 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1421 Introduced HB2168
CBD Subject:


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 establish a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities. According to our interpretation of this bill, any individual or licensed automobile dealer subject to taxes imposed by the State would be eligible for a refundable tax credit up to $6,000 per vehicle donated. West Virginia currently has a tax credit for individual taxpayers who donate vehicles to qualified charitable organizations and for new or used car dealers that sell a motor vehicle to low-income workers through a program administered by a qualified charitable organization which offset both Personal Income Tax and Corporation Net Income Tax. The current donated vehicle credit is the minimum of 50 percent of the value of the vehicle or $2,000. Although the proposed credit has a higher tax credit value of $6,000, it does not specify which taxes it would offset. The current vehicle credit has a maximum total of $300,000 per fiscal year while the proposed credit keeps the maximum total of $300,000 only in tax years 2023 and 2024 and increases it to $1.0 million for subsequent fiscal years. Passage of this bill would reduce General Revenue Fund collections by $300,000 in FY2024 and $1.0 million in subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2024 and $5,000 per year in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2023
Increase/Decrease
(use"-")
2024
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 20,000 5,000
Personal Services 0 5,000 5,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 15,000 0
2. Estimated Total Revenues 0 -300,000 -1,000,000


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


According to our interpretation of this bill, any individual or licensed automobile dealer subject to taxes imposed by the State would be eligible for a refundable tax credit up to $6,000 per vehicle donated. West Virginia currently has a tax credit for individual taxpayers who donate vehicles to qualified charitable organizations and for new or used car dealers that sell a motor vehicle to low-income workers through a program administered by a qualified charitable organization which offset both Personal Income Tax and Corporation Net Income Tax. The current donated vehicle credit is the minimum of 50 percent of the value of the vehicle or $2,000. Although the proposed credit has a higher tax credit value of $6,000, it does not specify which taxes it would offset. The current vehicle credit has a maximum total of $300,000 per fiscal year while the proposed credit keeps the maximum total of $300,000 only in tax years 2023 and 2024 and increases it to $1.0 million for subsequent fiscal years. Passage of this bill would reduce General Revenue Fund collections by $300,000 in FY2024 and $1.0 million in subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2024 and $5,000 per year in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to establish a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities. The bill fails to specify against which taxes the credit may be applied against. In addition, the credit created in the bill is already available in W.Va. Code ยง11-13FF. The only difference is the maximum credit allowed currently is $2,000 and, under the provisions of this bill, the maximum credit would be $6,000. In addition, this bill increases the aggregate amount of credits to be granted to $1.0 million beginning in 2025.



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