FISCAL NOTE

Date Requested: March 10, 2021
Time Requested: 11:05 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3042 Introduced HB3039
CBD Subject: Taxation


FUND(S):

General Revenue Fund, municipal funds

Sources of Revenue:

General Fund municipal funds

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 exempt feminine hygiene products and diapers from state sales tax. Passage of this bill would add an exemption from sales tax for feminine hygiene products and diapers. The exemption would reduce revenue for both the General Revenue Fund and municipalities that impose a sales tax. Based on our interpretation, passage of this bill would result in a loss to General Revenue Fund collections of roughly $800,000 in FY2022 and $2.0 million in subsequent fiscal years. Passage would also result in a minimal loss of revenue to municipalities in FY2022 and a loss of roughly $160,000 in subsequent fiscal years Absent an effective date in the bill, provisions of this bill would become effective on January 1, 2022. Additional administrative costs incurred by the State Tax Department are expected to be $1,000 in FY2022.



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 1,000 0
Personal Services 0 1,000 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -800,000 -2,000,000


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


Passage of this bill would add an exemption from sales tax for feminine hygiene products and diapers. The exemption would reduce revenue for both the General Revenue Fund and municipalities that impose a sales tax. Based on our interpretation, passage of this bill would result in a loss to General Revenue Fund collections of roughly $800,000 in FY2022 and $2.0 million in subsequent fiscal years. Absent an effective date in the bill, provisions of this bill would become effective on January 1, 2022. Additional administrative costs incurred by the State Tax Department are expected to be $1,000 in FY2022.



Memorandum


The stated purpose of this bill is to exempt feminine hygiene products and diapers from state sales tax. The definitions in the proposed bill may put West Virginia out of compliance with the Streamlined Sales and Use Tax Agreement. The proposed bill does not define “feminine hygiene product” and “diapers” the same as those terms are defined in Appendix C, Part II of, and required by, Article III, Section 327 of the Streamlined Sales and Use Tax Agreement, of which West Virginia is a signatory.



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