FISCAL NOTE
Date Requested: February 11, 2021
Time Requested: 02:34 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1539 |
Introduced |
HB2254 |
|
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, 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 provide different tobacco products tax rates in certain counties of the state.
According to our interpretation, the proposed bill would reduce the tobacco tax rates for certain border counties in the state. Effective July 1, 2021, the counties of McDowell, Mercer, Monroe, Greenbrier, Pocahontas, Pendleton, Hardy, Hampshire, Morgan, Berkeley, and Jefferson would have an excise tax rate of $0.30 for each 20 cigarettes, and the excise tax rate on products other than cigarettes would be 10 percent of the wholesale price. Effective July 1, 2021, the counties of Mingo, Wayne, and Cabell would have an excise tax rate of $1.10 for each 20 cigarettes, and the excise tax rate on products other than cigarettes would be 12 percent of the wholesale price. Based on our interpretation, the passage of the proposed legislation would decrease General Revenue Fund collections by $40.0 million in FY2022 and $43.0 million in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $70,000 in FY2021, $260,000 in FY2022 and $250,000 in subsequent fiscal years. The legislation would create three different rates of tax for cigarettes and other tobacco products in the state which would be difficult to administer. Tobacco is taxed and stamped prior to its entry into the state. Taxpayers would have to know in advance in which county the tobacco product was going to end up. This would likely force wholesalers to stamp all tobacco at the highest rate, and then seek refunds on all tobacco then distributed into preferred rate counties. Significant field audit of retailers would also be necessary to ensure that lower taxed product did not end up in higher tax counties.
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 |
70,000 |
260,000 |
250,000 |
| Personal Services |
20,000 |
250,000 |
250,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
10,000 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-40,000,000 |
-43,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would reduce the tobacco tax rates for certain border counties in the state. Effective July 1, 2021, the counties of McDowell, Mercer, Monroe, Greenbrier, Pocahontas, Pendleton, Hardy, Hampshire, Morgan, Berkeley, and Jefferson would have an excise tax rate of $0.30 for each 20 cigarettes, and the excise tax rate on products other than cigarettes would be 10 percent of the wholesale price. Effective July 1, 2021, the counties of Mingo, Wayne, and Cabell would have an excise tax rate of $1.10 for each 20 cigarettes, and the excise tax rate on products other than cigarettes would be 12 percent of the wholesale price. Based on our interpretation, the passage of the proposed legislation would decrease General Revenue Fund collections by $40.0 million in FY2022 and $43.0 million in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $70,000 in FY2021, $260,000 in FY2022 and $250,000 in subsequent fiscal years. The legislation would create three different rates of tax for cigarettes and other tobacco products in the state which would be difficult to administer. Tobacco is taxed and stamped prior to its entry into the state. Taxpayers would have to know in advance in which county the tobacco product was going to end up. This would likely force wholesalers to stamp all tobacco at the highest rate, and then seek refunds on all tobacco then distributed into preferred rate counties. Significant field audit of retailers would also be necessary to ensure that lower taxed product did not end up in higher tax counties.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov