FISCAL NOTE
Date Requested: February 10, 2020
Time Requested: 11:06 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3090 |
Introduced |
HB4764 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources, 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 increase the excise tax on E-cigarettes equal to the tax on 20 cigarettes.
The proposed bill would increase the excise tax on e-cigarette liquids to a tax which would be ‘equivalent’ to the current $1.20 excise tax on 20 cigarettes or like portion thereof. Based on our interpretation, the passage of the proposed legislation would increase the excise tax on E-cigarette liquids from $0.075 per milliliter or fraction thereof to $0.70 per milliliter or fraction thereof. The effective date of the bill is July 1, 2020. Passage of this bill would increase General Revenue Fund collections by $10 million in FY2021 and in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $25,000 in FY2020 and $5,000 in FY2021.
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 |
25,000 |
5,000 |
0 |
| Personal Services |
5,000 |
5,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
20,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
10,000,000 |
10,000,000 |
Explanation of above estimates (including long-range effect):
The proposed bill would increase the excise tax on e-cigarette liquids to a tax which would be ‘equivalent’ to the current $1.20 excise tax on 20 cigarettes or like portion thereof. Based on our interpretation, the passage of the proposed legislation would increase the excise tax on E-cigarette liquids from $0.075 per milliliter or fraction thereof to $0.70 per milliliter or fraction thereof. The effective date of the bill is July 1, 2020. Passage of this bill would increase General Revenue Fund collections by $10 million in FY2021 and in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $25,000 in FY2020 and $5,000 in FY2021.
Memorandum
The stated purpose of this bill is to increase the excise tax on E-cigarettes equal to the tax on 20 cigarettes.
The bill seeks to equalize the tax on two physically different items: a cigarette taxed by piece or pieces without regard to weight or volume, and a liquid taxed by volume. There is no clear way to equate a cigarette to a certain volume of e-cigarette liquid. The definition of cigarette in §11-17-2, which the bill relies on, has nothing to compare with the definition of e-cigarette liquid provided in §11-17-4b.
It is the Legislature’s authority to levy taxes and set the rate of a tax. The Tax Commissioner’s authority is to collect, administer, and enforce the tax. The bill essentially directs the Tax Commissioner to set the rate of tax for e-cigarette liquids without providing clear guidance on how the rate of tax is to be determined.
The bill requires the Tax Commissioner “to propose rules for legislative approval” under W.Va. Code §29A-3-1 et seq. and permits the Tax Commissioner to propose emergency rules under W. Va. .Code §29A-3-15.
The title states that the tax is upon e-cigarettes; however, the bill correctly states the tax is on e-cigarette liquid.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov