FISCAL NOTE
Date Requested: February 07, 2019
Time Requested: 11:26 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2940 |
Introduced |
HB2887 |
|
|---|
| CBD Subject: |
Corporations |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to establish a West Virginia business growth in low-income communities tax credit.
According to our interpretation, passage of this bill would promote a targeted venture capital program partially funded from the State General Revenue Fund. Under the provisions of this bill, a tax credit is given to a qualified community development entity that makes a qualified equity investment or to a subsequent holder of the qualified equity investment. This credit is calculated annually by multiplying the purchase price paid to the qualified community development entity for the qualified equity investment by the applicable percentage for the credit allowance date, which is 0 percent for the first three credit allowance dates and 15 percent for the next four credit allowance dates. The annual credit allowance may be used to offset the entity’s state insurance premium tax liability for tax periods on or after the credit allowance date. The bill defines opportunity zones in West Virginia as low-income census tracts receiving such designation from the U.S Treasury Department.
The tax against which this credit applies is administered by the Insurance Commission, not the State Tax Department. From a revenue perspective, the proposed bill would ultimately reduce General Revenue Fund collections by up to $36 million over a period of several years based on the $60 million qualified equity investment limits within the proposed legislation while insurance premium tax collections dedicated to volunteer fire departments and municipal pensions would be held harmless. The projected fiscal impact depends on the ability of the venture capital company to transfer available tax credits to insurance companies subject to the West Virginia Insurance Premium Tax.
No additional administrative costs would be incurred by the State Tax Department.
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 |
35,000 |
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 |
25,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-9,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would promote a targeted venture capital program partially funded from the State General Revenue Fund. Under the provisions of this bill, a tax credit is given to a qualified community development entity that makes a qualified equity investment or to a subsequent holder of the qualified equity investment. This credit is calculated annually by multiplying the purchase price paid to the qualified community development entity for the qualified equity investment by the applicable percentage for the credit allowance date, which is 0 percent for the first three credit allowance dates and 15 percent for the next four credit allowance dates. The annual credit allowance may be used to offset the entity’s state insurance premium tax liability for tax periods on or after the credit allowance date. The bill defines opportunity zones in West Virginia as low-income census tracts receiving such designation from the U.S Treasury Department.
The tax against which this credit applies is administered by the Insurance Commission, not the State Tax Department. From a revenue perspective, the proposed bill would ultimately reduce General Revenue Fund collections by up to $36 million over a period of several years based on the $60 million qualified equity investment limits within the proposed legislation while insurance premium tax collections dedicated to volunteer fire departments and municipal pensions would be held harmless. The projected fiscal impact depends on the ability of the venture capital company to transfer available tax credits to insurance companies subject to the West Virginia Insurance Premium Tax.
No additional administrative costs would be incurred by the State Tax Department.
Memorandum
The stated purpose of this bill is to establish a West Virginia business growth in low-income communities tax credit.
The proposed bill requires the Tax Commissioner to provide written notice of certification of qualified investments to qualified entities. The bill does not relate to any tax administered by the State Tax Department.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov