FISCAL NOTE
Date Requested: January 18, 2023
Time Requested: 10:41 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1815 |
Introduced |
HB2581 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
State Road Fund
Sources of Revenue:
Other Fund State Road 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 reduce the West Virginia tax on gasoline by 50%.
According to our interpretation, the bill provides for the minimum determined average wholesale price of motor fuel to be $3.04 per gallon and the minimum variable tax to be 7.6 cents per gallon. The effective date of the legislation is July 1, 2023.
The Motor Fuel Tax is composed of two separate components: the flat rate and a variable component. The flat rate is currently set at $0.205 per invoiced gallon. The variable rate is equal to 5 percent of the determined average wholesale price of motor fuel. Current W. Va. Code §11-15-18b provides that, the average wholesale price used in the calculation of the variable component cannot be less than $3.04 per gallon. Application of the variable rate of 5 percent to the minimum average wholesale price of $3.04 results in a minimum variable tax of 15.2 cents per gallon.
Based on our interpretation, the legislation, if passed, would have no impact on General Revenue Fund collections. The minimum average wholesale price and the variable tax rate remain the same; therefore, there would be no change to the calculation of the variable component of the Motor Fuel Tax.
There will be no additional costs incurred by the State Tax Department
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 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill provides for the minimum determined average wholesale price of motor fuel to be $3.04 per gallon and the minimum variable tax to be 7.6 cents per gallon. The effective date of the legislation is July 1, 2023.
The Motor Fuel Tax is composed of two separate components: the flat rate and a variable component. The flat rate is currently set at $0.205 per invoiced gallon. The variable rate is equal to 5 percent of the determined average wholesale price of motor fuel. Current W. Va. Code §11-15-18b provides that, the average wholesale price used in the calculation of the variable component cannot be less than $3.04 per gallon. Application of the variable rate of 5 percent to the minimum average wholesale price of $3.04 results in a minimum variable tax of 15.2 cents per gallon.
Based on our interpretation, the legislation, if passed, would have no impact on General Revenue Fund collections. The minimum average wholesale price and the variable tax rate remain the same; therefore, there would be no change to the calculation of the variable component of the Motor Fuel Tax.
There will be no additional costs incurred by the State Tax Department
Memorandum
The stated purpose of this bill is to reduce the West Virginia tax on gasoline by 50%.
The title of the bill claims that the bill is “relating to reducing the flat tax on motor fuel by 50 percent. By amending §11-15-18b, the bill deals only with the variable component of the motor fuel tax, not the flat rate component.
The “not less than” language of the bill essentially establishes a tax floor, but it does not establish a rate. The actual variable tax is still determined by multiplying $3.04 per gallon by the 5 percent tax rate imposed by §11-14C-5, which results in a variable tax of 15.2 cents. The calculated minimum variable rate of 15.2 cents is higher than the new floor of 7.6 cents per gallon set in the bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov