FISCAL NOTE
Date Requested: February 03, 2016
Time Requested: 02:39 PM |
| Agency: |
Tax Department, State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2195 |
Introduced |
HB4369 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General 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 decrease and end the tax on timber.
The provisions of this bill would end the regular timber severance tax thirteen months after the tax is reinstated following the end of the workers’ compensation severance tax. Relative to the proposed Executive Budget, the proposed change would result in a loss to the special revenue fund for the Division of Forestry of roughly $1.3 million in FY2017, up to $2.2 million FY2018 and $2.5 million per year, thereafter. The reduction in revenue during the first year would be attributable to a lower tax rate of 1.22 percent.
Current Law provides for the reinstatement of the timber severance tax at a rate of 1.22 percent for the benefit of the Division of Forestry once the temporary timber severance tax dedicated to the Old Workers’ Compensation Debt Fund (Old Fund) ends. In the proposed Executive Budget, the 2.78 percent temporary timber severance tax that generates roughly $3.5 million per year for the Old Fund would end no later than June 30, 2016. The Executive Budget proposes reinstatement of the timber severance tax for the benefit of the Division of Forestry as of July 1, 2016 at a rate of 2.78 percent with an anticipated yield of $2.4 million in FY2017. A lower revenue yield for the reinstated timber severance tax would be attributable to tax preferences not currently available against the workers’ compensation timber severance tax such as the $500 annual exemption tax credit and the manufacturing investment tax credit for wood products manufacturing.
The State Tax Department would incur one-time additional administrative costs of $13,900.
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 |
13,900 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
2,400 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
11,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,300,000 |
-2,500,000 |
Explanation of above estimates (including long-range effect):
The provisions of this bill would end the regular timber severance tax thirteen months after the tax is reinstated following the end of the workers’ compensation severance tax. Relative to the proposed Executive Budget, the proposed change would result in a loss to the special revenue fund for the Division of Forestry of roughly $1.3 million in FY2017, up to $2.2 million FY2018 and $2.5 million per year, thereafter. The reduction in revenue during the first year would be attributable to a lower tax rate of 1.22 percent.
Current Law provides for the reinstatement of the timber severance tax at a rate of 1.22 percent for the benefit of the Division of Forestry once the temporary timber severance tax dedicated to the Old Workers’ Compensation Debt Fund (Old Fund) ends. In the proposed Executive Budget, the 2.78 percent temporary timber severance tax that generates roughly $3.5 million per year for the Old Fund would end no later than June 30, 2016. The Executive Budget proposes reinstatement of the timber severance tax for the benefit of the Division of Forestry as of July 1, 2016 at a rate of 2.78 percent with an anticipated yield of $2.4 million in FY2017. A lower revenue yield for the reinstated timber severance tax would be attributable to tax preferences not currently available against the workers’ compensation timber severance tax such as the $500 annual exemption tax credit and the manufacturing investment tax credit for wood products manufacturing.
The State Tax Department would incur one-time additional administrative costs of $13,900.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov