FISCAL NOTE

Date Requested: February 24, 2021
Time Requested: 08:56 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2191 Introduced HB2714
CBD Subject:


FUND(S):

Ryan Brown Addiction Prevention and Recovery Fund

Sources of Revenue:

Special Fund

Legislation creates:

Creates New 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 a 10 cent tax on each opium and opiate Schedule II drug sold to pharmacies in this state to fund drug treatment programs through the Ryan Brown Addiction Prevention and Recovery Fund. This bill would impose an excise tax of ten cents on each pill purchased by or for any licensed pharmacy in West Virginia for all opium and opiate drugs and their derivatives and substances included as Schedule II drugs under W. Va. Code §60A-2-206. The tax is imposed on the pharmaceutical manufacturer or distributor, and the pharmacies are to collect and remit the tax to the Tax Commissioner. The revenue collected from this bill would be deposited to the Ryan Brown Addiction Prevention and Recovery Fund. Absent an effective date in this bill, this imposed tax would go into effect 90 days from its passage. The total revenue increase from the ten-cent tax per dosage would be roughly $7.4 million in the first full year of enactment. Additional administrative costs to the State Tax Department would be $66,000 in FY2022 and $45,000 in subsequent years.



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 66,000 45,000
Personal Services 0 45,000 45,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,000 0
Other 0 20,000 0
2. Estimated Total Revenues 0 0 7,400,000


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


This bill would impose an excise tax of ten cents on each pill purchased by or for any licensed pharmacy in West Virginia for all opium and opiate drugs and their derivatives and substances included as Schedule II drugs under W. Va. Code §60A-2-206. The tax is imposed on the pharmaceutical manufacturer or distributor, and the pharmacies are to collect and remit the tax to the Tax Commissioner. The revenue collected from this bill would be deposited to the Ryan Brown Addiction Prevention and Recovery Fund. Absent an effective date in this bill, this imposed tax would go into effect 90 days from its passage. The total revenue increase from the ten-cent tax per dosage would be roughly $7.4 million during the first full year of enactment. Additional administrative costs to the State Tax Department would be $66,000 in FY2022 and $45,000 in subsequent years.



Memorandum


The stated purpose of this bill is to create a 10 cent tax on each opium and opiate Schedule II drug sold to pharmacies in this state to fund drug treatment programs through the Ryan Brown Addiction Prevention and Recovery Fund. As written, the proposed bill does not give the Tax Commissioner the authority necessary to administer, collect, and enforce the tax. The provisions of Article 10, Chapter 11, “Tax Procedure and Administration Act,” only apply when it is expressly provided by the Legislature. Both Article 9 and Article 10 of Chapter 11 of the West Virginia Code must be made expressly to apply to the new article for the Tax Commissioner to administer the proposed excise tax. The bill is vague and leaves out many details as to how this excise tax is to be administered. The bill does not define any of the terms used in this excise tax, such as “licensed pharmacy”, “pharmaceutical manufacturers,” “distributors” or “opium and opiate drugs and their derivatives.” The bill provides that all money collected is to be deposited into the Ryan Brown Addiction Prevention and Recovery Fund. However, the bill does not address whether interest and additions to tax paid under §11-10-1 et seq. should also be paid into the fund or that the amount deposited should be less the amount of any refunds paid. There may also be an issue with dedicating the tax proceeds to the Ryan Brown Addiction Prevention and Recovery Fund because W. Va. Code §16-52-2 states that expenditures from the fund are not authorized from collections but are to be made only in accordance with appropriation by the Legislature. There is no internal effective date of the article. If the article is effective 90 days after passage, then the administrative burden will be great to have the tax administration unit ready and the applications for certification, the forms, and instructions to be created.



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