FISCAL NOTE
Date Requested: January 22, 2020
Time Requested: 02:54 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1509 |
Introduced |
HB4465 |
|
|---|
| CBD Subject: |
Energy |
|---|
|
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 provide a tax rebate and tax credit for certain employers who invest in new facilities.
According to our interpretation of this bill, manufacturers and other businesses who invest in a few facilities or processes that result in increased employment and an additional demand for electric power are eligible for a tax rebate and a tax credit. The tax rebate would be equivalent to 50 percent of the cost of the additional electrical consumption over their average electrical consumption prior to the investment. If an eligible business makes an additional investment which draws electrical power from renewable sources, the business may claim a tax credit, apportioned over 35 years, for the cost of the investment. There does not appear to be language in this bill that would prevent an eligible taxpayer from claiming existing business tax credits in addition to the proposed tax credit and rebate. It is not clear which tax the proposed rebate and credit applies to and how this program would be implemented, making it difficult to determine the revenue loss to the General Revenue Fund in future fiscal years.
Additional administrative costs incurred by the State Tax Department would be $135,000 in FY2021 and $10,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
135,000 |
10,000 |
| Personal Services |
0 |
25,000 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
110,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, manufacturers and other businesses who invest in a few facilities or processes that result in increased employment and an additional demand for electric power are eligible for a tax rebate and a tax credit. The tax rebate would be equivalent to 50 percent of the cost of the additional electrical consumption over their average electrical consumption prior to the investment. If an eligible business makes an additional investment which draws electrical power from renewable sources, the business may claim a tax credit, apportioned over 35 years, for the cost of the investment. There does not appear to be language in this bill that would prevent an eligible taxpayer from claiming existing business tax credits in addition to the proposed tax credit and rebate. It is not clear which tax the proposed rebate and credit applies to and how this program would be implemented, making it difficult to determine the revenue loss to the General Revenue Fund in future fiscal years.
Additional administrative costs incurred by the State Tax Department would be $135,000 in FY2021 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a tax rebate and tax credit for certain employers who invest in new facilities.
This bill is missing several provisions that are not only common, but sometimes necessary, to administer a rebate or tax credit. These include definitions, an effective date, a sunset date, reporting requirements, which tax the rebate or credit applies to, specific method to qualify for the rebate or credit, how to administer the rebate or credit, whether the rebate or credit are refundable, incorporation of Articles 9 and 10, forfeiture, recapture tax and whether additions attach upon forfeiture. There are no requirements regarding the taxpayer being an employer despite the name of the article and the note.
While the bill identifies the rebate amount up to 50 percent of the additional electrical cost, it does not provide any scale for amounts less than 50 percent. The bill also appears to use the terms “rebate” and “credit” interchangeably, creating uncertainty. Since it is a rebate, it is unclear whether the tax must be paid before the rebate is granted. Likewise, it does not indicate which tax is being rebated.
The deficiencies in this bill would be difficult to fix through legislative rules, since any rules would necessarily greatly exceed statutory authority.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov