FISCAL NOTE
Date Requested: February 10, 2021
Time Requested: 04:48 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1445 |
Introduced |
HB2244 |
|
|---|
| CBD Subject: |
|
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|
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 a tax rebate and tax credit for certain employers who invest in new facilities.
As drafted, we are unable to provide an estimate of fiscal impact or costs associated with the provisions of the proposed rebates or tax credits proposed in this bill because of the lack of various definitions for qualified investment and other parameters necessary for a taxpayer to determine the potential tax benefits and their application. It is unclear whether the provisions of this bill would provide for an investment tax credit, a tax rebate or both. It is also unclear whether the measurement of tax benefit is based on the increased cost of electricity, the increased use of electricity, or capital investment or some other parameter.
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 |
0 |
0 |
| Personal Services |
0 |
0 |
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 |
0 |
0 |
Explanation of above estimates (including long-range effect):
As drafted, we are unable to provide an estimate of fiscal impact or costs associated with the provisions of the proposed rebates or tax credits proposed in this bill because of the lack of various definitions for qualified investment and other parameters necessary for a taxpayer to determine the potential tax benefits and their application. It is unclear whether the provisions of this bill would provide for an investment tax credit, a tax rebate or both. It is also unclear whether the measurement of tax benefit is based on the increased cost of electricity, the increased use of electricity, or capital investment some other parameter.
Memorandum
The stated purpose of this bill is to provide a tax rebate and tax credit for certain employers who invest in new facilities.
The proposed credit appears to be calculated as 1/35th of the cost of investment in increased use of electrical power from renewable resources. References to this credit are inconsistent as it is described as both “apportioned over 35 years” and “until the expiration of 10 years”. Unlike the rebate which refers specifically to Personal Income Tax, the credit does not describe to which tax it would apply.
This bill is missing several provisions that are not only common, but sometimes necessary, to administer a rebate or credit. These include definitions, an effective date, a sunset date, reporting requirements, which tax the rebate or credit applies to, specific method to qualify for the rebate or credit, method to claim the rebate or credit, how to administer the rebate or credit, whether the rebate or credit are refundable, incorporation of Articles 9 and 10, forfeiture, recapture provisions, and whether additions attach upon forfeiture. Further, there are no requirements regarding the taxpayer being an employer, despite the name of the article and the note. The provisions in the bill are vague and open-ended.
The term “alteration in business practices” appears to allow the rebate even if the “changes required for eligibility” are not attributable to an investment; but instead are only the result of a change in the way of conducting business. However, the amount of the rebate is “up to 50 percent of the cost of the additional electrical consumption over their average electrical consumption prior to the investment, based on the most recent two years,” which appears to initiate the need for an investment. While the bill identifies the rebate amount as up to 50 percent of the additional electrical cost, the bill does not provide a scale for amounts less than 50 percent.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov