FISCAL NOTE

Date Requested: February 23, 2016
Time Requested: 02:43 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2611 Introduced HB4682
CBD Subject:


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 enact the agricultural and tourism development act. It covers wineries, farm wineries, micro-breweries and mini-distilleries. A tax credit is provided for capital expenditures, local regulation is limited and the consequences of sales of the business are enunciated. According to our interpretation, passage of this bill would result in an annual revenue decrease of less than $50,000. This estimate is derived from actual experiences in other states with a similar tax preference. The amount of this proposed tax credit is equal to 25 percent of all the qualified expenditures related to the establishment of a new winery, farm winery, micro-brewer or mini-distiller and capital improvements made to existing wineries, farm wineries, micro-brewers or mini-distillers. The credit may not exceed $250,000 in a calendar year. If the amount of the credit exceeds the taxpayer’s tax liability for the taxable year, the amount which exceeds the tax liability may be carried over up to ten tax years and applied as a credit against the tax liability of the taxpayer. Additional administrative costs would $19,250 in FY2017 and $10,000 per 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 19,250 10,000
Personal Services 0 10,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 9,250 0
2. Estimated Total Revenues 0 0 -50,000


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


According to our interpretation, passage of this bill would result in an annual revenue decrease of less than $50,000. This estimate is derived from actual experiences in other states with a similar tax preference. The amount of this proposed tax credit is equal to 25 percent of all the qualified expenditures related to the establishment of a new winery, farm winery, micro-brewer or mini-distiller and capital improvements made to existing wineries, farm wineries, micro-brewers or mini-distillers. The credit may not exceed $250,000 in a calendar year. If the amount of the credit exceeds the taxpayer’s tax liability for the taxable year, the amount which exceeds the tax liability may be carried over up to ten tax years and applied as a credit against the tax liability of the taxpayer. Additional administrative costs would $19,250 in FY2017 and $10,000 per year thereafter.



Memorandum


The stated purpose of this bill is to enact the agricultural and tourism development act. It covers wineries, farm wineries, micro-breweries and mini-distilleries. A tax credit is provided for capital expenditures, local regulation is limited and the consequences of sales of the business are enunciated. The total cap per calendar year is $250,000. If the total amount of all applications exceeds $250,000, the State Tax Department would be required to allocate tax credits on a pro-rata basis. There would need to be a cut-off date for application to help prevent excess credit allocation claims.



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