FISCAL NOTE
Date Requested: January 21, 2022
Time Requested: 04:12 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1918 |
Introduced |
HB4342 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 create “The Relief at the Pump Law” which provides a 10-cent refund of tax paid gasoline, diesel, or gasohol gallonage paid at the pump by residents of West Virginia during times of surplus budgets by the State as a way to give back to the taxpayers.
Per our interpretation, any person regularly operating any vehicle in West Virginia who purchases tax-paid gasoline, diesel, or gasohol at a retail pump may be eligible for a refund equal to 10 cents per gallon of the purchased fuel. The bill does not specify that the pump be located in West Virginia or limit eligibility based on the use of the fuel. The refund is only available during years where a budget surplus is “evident”, and the state is not under emergency conditions. In addition, the refund can only be claimed by individuals who pay West Virginia Personal Income Tax. The claimant must submit their request for a refund to the Tax Commissioner within six months of the date of purchase at the pump and include an affidavit and copies of the sales receipts. The provisions of the bill would apply to all gasoline, diesel, and gasohol purchased at the pump on or after July 1, 2022.
The State of West Virginia is constitutionally prohibited from running a budget deficit; therefore, every year will require a budget surplus regardless of the actual fiscal health of the state. Based on average miles traveled and average fuel consumption, the typical claimant would likely receive less than $50 every six months; therefore, the burden of applying for the refund may far exceed the benefit for most taxpayers. According to our interpretation, if the majority of eligible taxpayers apply for the refund, the proposed legislation could potentially result in a decline in the General Revenue Fund in excess of $80.0 million beginning in FY2023. However, overall participation rates are likely to be very low due to the requirements necessary to track actual purchases of gallons of fuel by each individual. We are unable to accurately measure the level of taxpayer participation in this novel program.
Additional administrative costs incurred by the State Tax Department would be $103,000 in FY2023 and $95,000 in subsequent years. Administrative and compliance costs will be very high relative to the benefit received.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
103,000 |
95,000 |
| Personal Services |
0 |
90,000 |
90,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
3,000 |
0 |
| Other |
0 |
10,000 |
5,000 |
| 2. Estimated Total Revenues |
0 |
-80,000,000 |
-80,000,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, any person regularly operating any vehicle in West Virginia who purchases tax-paid gasoline, diesel, or gasohol at a retail pump may be eligible for a refund equal to 10 cents per gallon of the purchased fuel. The bill does not specify that the pump be located in West Virginia or limit eligibility based on the use of the fuel. The refund is only available during years where a budget surplus is “evident”, and the state is not under emergency conditions. In addition, the refund can only be claimed by individuals who pay West Virginia Personal Income Tax. The claimant must submit their request for a refund to the Tax Commissioner within six months of the date of purchase at the pump and include an affidavit and copies of the sales receipts. The provisions of the bill would apply to all gasoline, diesel, and gasohol purchased at the pump on or after July 1, 2022.
The State of West Virginia is constitutionally prohibited from running a budget deficit; therefore, every year will require a budget surplus regardless of the actual fiscal health of the state. Based on average miles traveled and average fuel consumption, the typical claimant would likely receive less than $50 every six months; therefore, the burden of applying for the refund may far exceed the benefit for most taxpayers. According to our interpretation, if the majority of eligible taxpayers apply for the refund, the proposed legislation could potentially result in a decline in the General Revenue Fund in excess of $80.0 million beginning in FY2023. However, overall participation rates are likely to be very low due to the requirements necessary to track actual purchases of gallons of fuel by each individual. We are unable to accurately measure the level of taxpayer participation in this novel program.
Additional administrative costs incurred by the State Tax Department would be $103,000 in FY2023 and $95,000 in subsequent years. Administrative and compliance costs will be very high relative to the benefit received.
Memorandum
The stated purpose of this bill is to return to create “The Relief at the Pump Law” which provides a 10-cent refund of tax paid gasoline, diesel, or gasohol gallonage paid at the pump by residents of West Virginia during times of surplus budgets by the State as a way to give back to the taxpayers.
The bill attempts to add a new section to a repealed article. Article 14 of Chapter 11 was repealed effective January 1, 2004.
While the section heading states that the refund be claimed by West Virginia residents, “residency” is not addressed or required in the body of the bill. Subsection (d) refers to “taxpayers who pay West Virginia income tax”; however, some non-residents also pay West Virginia state income tax.
Rather than a requirement of state residency, the refund is available to “any person regularly operating any vehicle in this state who purchases tax-paid gasoline, diesel, or gasohol.” There are non-residents who regularly drive in the state.
There is no clear requirement that the purchase of gasoline, diesel or gasohol be made in West Virginia. The terms “regularly,” “at the pump,” and “emergency conditions” are not defined.
Requests for refunds must be claimed within six months of the purchase at the pump. There is no minimum set for the number of refunds sought. This could result in an inestimable number of refund requests which could lead to significant administrative costs.
The term “refund” is used throughout, however, the term “tax waiver” is used in (a) and “tax credit” is used in (d). The “tax credits” are to be “redeemed.” These are all distinct terms with different meanings and vastly different tax administration processes and requirements. The combined use of these terms can only lead to confusion for taxpayers and tax administrators.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov