FISCAL NOTE
Date Requested: March 21, 2025
Time Requested: 08:37 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3750 |
Introduced |
SB855 |
|
|---|
| CBD Subject: |
Environment |
|---|
|
FUND(S):
Beverage Container Recycling Trust Fund, General Revenue Fund
Sources of Revenue:
General Fund Beveral Container Recycling Trust Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense, Creates New Fund: Beverage Container Recycling Trust Fund
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 West Virginia Beverage Producer Responsibility Act. The bill states definitions; sets forth producer responsibility organization requirements; establishes a recycling refund trust fund; requires Auditor oversight; delineates label standards and deposit and refund procedures; authorizes the promulgation of rules; provides a compliance deadline; establishes a tax credit for producer responsibility organizations that build or develop a redemption center or technology-based redemption center; identifies credit limitation; and states definitions.
This bill would allow a credit against the Corporation Net Income Tax, Personal Income Tax, and Business and Occupation Tax. The tax credit would be provided to an eligible taxpayer who is a West Virginia Beverage Producer Responsibility Organization (PRO) who purchases or leases property for the purpose of building or developing a redemption center or technology-based redemption center in this state. PROs are nonprofit corporations that are formed for the purpose of creating and implementing a plan to meet and maintain a biennial average recycling rate of at least 75% for beverage containers by January 1, 2035. The PRO would manage a system to collect and refund the full amount of a consumer deposit. All collected consumer funds would be deposited to the credit of a recycling trust fund called the “Beverage Container Recycling Trust Fund.”
According to our research, five states currently have passed similar legislation related to extended producer responsibility. However, none of these states offer tax credits for the building or development of redemption centers. The provisions of this bill would create a largely undefined investment tax credit to be used by nonprofit PRO corporations. The aggregate amount of the credit would be applied over a ten-year period, at the rate of one tenth thereof, and shall not exceed 50% of the tax due for the taxable year. Purchase of property to be used for the purpose of building or developing a redemption center must be done so on or after July 1, 2025. The credits would apply against the Business and Occupation Tax, and this tax type is only paid by public service or utility businesses. As currently structured, we cannot reasonably estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Division would be $29,150 in FY2026 and $5,500 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
29,150 |
5,500 |
| Personal Services |
0 |
5,500 |
5,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
22,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would allow a credit against the Corporation Net Income Tax, Personal Income Tax, and Business and Occupation Tax. The tax credit would be provided to an eligible taxpayer who is a West Virginia Beverage Producer Responsibility Organization (PRO) who purchases or leases property for the purpose of building or developing a redemption center or technology-based redemption center in this state. PROs are nonprofit corporations that are formed for the purpose of creating and implementing a plan to meet and maintain a biennial average recycling rate of at least 75% for beverage containers by January 1, 2035. The PRO would manage a system to collect and refund the full amount of a consumer deposit. All collected consumer funds would be deposited to the credit of a recycling trust fund called the “Beverage Container Recycling Trust Fund.”
According to our research, five states currently have passed similar legislation related to extended producer responsibility. However, none of these states offer tax credits for the building or development of redemption centers. The provisions of this bill would create a largely undefined investment tax credit to be used by nonprofit PRO corporations. The aggregate amount of the credit would be applied over a ten-year period, at the rate of one tenth thereof, and shall not exceed 50% of the tax due for the taxable year. Purchase of property to be used for the purpose of building or developing a redemption center must be done so on or after July 1, 2025. The credits would apply against the Business and Occupation Tax, and this tax type is only paid by public service or utility businesses. As currently structured, we cannot reasonably estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Division would be $29,150 in FY2026 and $5,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create the West Virginia Beverage Producer Responsibility Act. The bill states definitions; sets forth producer responsibility organization requirements; establishes a recycling refund trust fund; requires Auditor oversight; delineates label standards and deposit and refund procedures; authorizes the promulgation of rules; provides a compliance deadline; establishes a tax credit for producer responsibility organizations that build or develop a redemption center or technology-based redemption center; identifies credit limitation; and states definitions.
At no point does Article 13NN state how the amount of the credit is determined. It may be implied from the definitions in W. Va. Code §11-13NN-1(a) that the amount of the credit is to be determined with reference to the cost of the “property purchased or leased for the purpose of building or developing a redemption center or technology-based redemption center in this state;” but there is no express language stating that.
Furthermore, while 11-13NN-1(a) states that the credit can be taken against taxpayer liability for either the personal income tax or the corporation net income tax, subdivisions (a)(2) and (a)(4) both refer to taking the credit against the business and occupation tax, creating confusion regarding just what taxes are in play. Subdivisions (a)(2) and (a)(4) are nearly identical and apparently redundant for no known reason.
.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov