FISCAL NOTE

Date Requested: February 12, 2016
Time Requested: 11:32 AM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2663 Introduced SB582
CBD Subject: Taxation


FUND(S):

State Road Fund

Sources of Revenue:

Other Fund State Road Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to provide a refundable tax credit for motor fuel sold for use or consumed in railroad diesel locomotives. According to our interpretation, this bill provides a refundable exemption, not a credit, from the variable rate or the sales tax rate portion of the motor fuel tax, as the fuel is already exempt from the fixed portion of the tax. The current variable rate is at 12.7 cents per gallon. The bill provides for the limit of the refundable exemption in the aggregate to equal $4.3 million. According to available information, this is close to the amount collected for this tax from railroad diesel locomotives. It is anticipated that gas prices, and thus the variable rate of tax, should rise by the effective date of this bill. The exemption should reach its maximum by 2018 and could either rise or fall depending on the average wholesale price of fuel. The variable sales tax level may vary by up to 10 percent per year based on these changes. Administrative costs to the Tax Department will be $63,000 in FY2017 and $35,000 in each year thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 63,000 35,000
Personal Services 0 35,000 35,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 28,000 0
2. Estimated Total Revenues 0 0 -4,300,000


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


According to our interpretation, this bill provides a refundable exemption, not a credit, from the variable rate or the sales tax rate portion of the motor fuel tax, as the fuel is already exempt from the fixed portion of the tax. The current variable rate is at 12.7 cents per gallon. The bill provides for the limit of the refundable exemption in the aggregate to equal $4.3 million. According to available information, this is close to the amount collected for this tax from railroad diesel locomotives. It is anticipated that gas prices, and thus the variable rate of tax, should rise by the effective date of this bill. The exemption should reach its maximum by 2018 and could either rise or fall depending on the average wholesale price of fuel. The variable sales tax level may vary by up to 10 percent per year based on these changes. Administrative costs to the Tax Department will be $63,000 in FY2017 and $35,000 in each year thereafter.



Memorandum






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