FISCAL NOTE

Date Requested: February 10, 2021
Time Requested: 04:31 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1291 Introduced HB2148
CBD Subject:


FUND(S):

Public Employees Insurance Agency Financial Stability Fund

Sources of Revenue:

Other Fund Public Employees Insurance Agency Financial Stability Fund

Legislation creates:

Creates New Revenue, Creates New Expense



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to impose a general data mining service tax on commercial data operators. The bill makes legislative findings. The bill establishes a valuation method. The bill establishes the rate of tax. The bill requires the proceeds be deposited into the Public Employees Insurance Agency Financial Stability Fund. The bill requires rule-making. The bill defines terms. According to our interpretation, the provisions of this bill attempt to impose an intangible property tax of 1 percent on the appraised value of data of a ‘commercial data operator.’ A commercial data operator is defined as a consumer online services provider or data broker that generates revenue from the use, collection, processing, sale or sharing of user data and average more than 10,000 unique monthly visitors or users in West Virginia. Based on legal issues and vagueness of the valuation method to implement the tax, it is not possible to estimate potential revenue from this bill for the Public Employees Insurance Agency Financial Stability Fund. Additional administrative costs to the Tax Department would be $213,500 in FY2022 and $135,000 in subsequent years. 



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 2,132,500 135,000
Personal Services 0 150,000 125,000
Current Expenses 0 10,000 10,000
Repairs and Alterations 0 0 0
Assets 0 3,500 0
Other 0 50,000 0
2. Estimated Total Revenues 0 0 0


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


According to our interpretation, the provisions of this bill attempt to impose an intangible property tax on 1 percent on the appraised value of data of a ‘commercial data operator.’ A commercial data operator is defined as a consumer online services provider or data broker that generates revenue from the use, collection, processing, sale, or sharing of user data and average more than 10,000 unique monthly visitors or users in West Virginia. Based on legal issues and vagueness of the valuation method to implement the tax, it is not possible to estimate potential revenue from this bill for the Public Employees Insurance Agency Financial Stability Fund. Additional administrative costs to the Tax Department would be $213,500 in FY2022 and 135,000 in subsequent years.



Memorandum


The stated purpose of this bill is to impose a general data mining service tax on commercial data operators. The bill makes legislative findings. The bill establishes a valuation method. The bill establishes a rate of tax. The bill requires the proceeds be deposited into the Public Employees Insurance Agency Financial Stability Fund. The bill requires rule-making. The bill defines terms. Although HB 4898 purports to impose a general data mining service tax on commercial data operators, it actually imposes a tax on the value of data and therefore could be interpreted as an ad valorem (measured by value) tax. This would arguably make the tax a property tax. The law is unsettled as to whether data is tangible personal property or intangible personal property. Either result (tangible or intangible) could have Constitutional implications, as well as having some undefined impact with relation to phase out of property tax on intangible personal property tax (class 1) which occurred some years ago. The bill would create a tax on data mining, seemingly defined as the use, collection, processing, sale or sharing of user data. It is unclear whether the tax is a pyramiding tax that would impose it on the company collecting, as well as the company processing, the company sharing, and the company using the data. The tax is a value tax of 1% of the value of the data, which is to be valued according to some vague standards. There is no internal effective date in this bill.



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