FISCAL NOTE

Date Requested: February 12, 2019
Time Requested: 01:04 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3196 Introduced HB3071
CBD Subject:


FUND(S):

General Revenue Fund, Young West Virginians Tobacco Cessation Initiative Fund

Sources of Revenue:

General Fund Young West Virginians Tobacco Cessation Initiative Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses, Creates New Fund: Young West Virginians Tobacco Cessation Initiative Fund



Fiscal Note Summary


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


The stated purpose of this bill is to increase the taxes on electronic cigarettes and using the proceeds to promote tobacco cessation initiative directed towards young West Virginians administered at the Department of Health and Human Resources. According to our interpretation of this bill, on and after July 1, 2019, the excise tax on e-cigarettes would be raised from the current rate of 7.5 cents per milliliter to 15 cents per milliliter. The revenue gained would be deposited into a special account in the State Treasury known as the “Young West Virginians Tobacco Cessation Initiative Fund”. The bill does not impose a floor tax, which may lead to noncompliance in the first year. Passage of this bill would result in a loss to the General Revenue Fund of roughly $0.1 million and a gain of roughly $1.4 million to the West Virginia Tobacco Cessation Initiative Fund in FY2020 and thereafter. Additional administrative costs incurred by the State Tax Department would be $45,000 in the remainder of FY2019, $20,000 in FY2020 and $10,000 in FY2021 and thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 45,000 20,000 10,000
Personal Services 0 20,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 45,000 0 0
2. Estimated Total Revenues 0 -1,400,000 -1,400,000


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


According to our interpretation of this bill, on and after July 1, 2019, the excise tax on e-cigarettes would be raised from the current rate of 7.5 cents per milliliter to 15 cents per milliliter. The revenue gained would be deposited into a special account in the State Treasury known as the “Young West Virginians Tobacco Cessation Initiative Fund”. The bill does not impose a floor tax, which may lead to noncompliance in the first year. Passage of this bill would result in a loss to the General Revenue Fund of roughly $0.1 million and a gain of roughly $1.4 million to the West Virginia Tobacco Cessation Initiative Fund in FY2020 and thereafter. Additional administrative costs incurred by the State Tax Department would be $45,000 in the remainder of FY2019, $20,000 in FY2020 and $10,000 in FY2021 and thereafter.



Memorandum


The stated purpose of this bill is to increase the taxes on electronic cigarettes and using the proceeds to promote tobacco cessation initiative directed towards young West Virginians administered at the Department of Health and Human Resources. Expenditures from the tobacco cessation fund are not authorized from collections but are to be made only in accordance with the Legislature and in accordance with §12-3-1 et seq., and upon fulfillment of the Budget Office under §11B-2-1 et seq. However, the expenditures for fiscal year ending June 30, 2020 are from collections.



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