FISCAL NOTE
Date Requested: February 23, 2021
Time Requested: 12:38 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2273 |
Introduced |
HB2710 |
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| CBD Subject: |
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FUND(S):
County governments
Sources of Revenue:
Other Fund county governments
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 allow counties that contain municipalities with a home rule sales tax to also enact a sales tax equal to that of the municipality.
According to our interpretation, the proposed bill allows a county that contains within its boundaries a municipality participating in the Home Rule Pilot Program pursuant to W. Va. Code §8-1-5a, when the municipality has enacted a municipal sales tax, to enact a county sales tax equal to the municipal sales tax amount. The county sales tax would not be applicable to sales attributable to a municipality within the county that has enacted a municipal sales tax pursuant to W.Va. Code §8-1-5a.
The legislation does not address counties where no municipalities have enacted a municipal sales tax or those counties with only municipalities who have enacted a municipal sales tax under W.Va. Code §8-13C-4. In addition, the bill does not preclude the county from charging the tax in municipalities within its boundaries that have enacted a municipal sales tax pursuant to W.Va. Code §8-13C-4.
As of July 1, 2021, twenty-five of the fifty-five counties in West Virginia would qualify to impose a county sales tax. Per our interpretation, the additional county tax would generate roughly $75 million for the 25 eligible counties in FY2022. Revenues would vary significantly in future years based on the number and locations of new municipalities participating in the Municipal Home Rule Pilot Program which enact a municipal sales tax under W.Va. Code §8-1-5a.
Additional administrative costs incurred by the Tax Department would be $40,000 in FY2021, $154,500 in FY2022, $150,000 in FY2023 and $210,000 in subsequent fiscal 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 |
40,000 |
154,500 |
210,000 |
| Personal Services |
0 |
150,000 |
210,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
4,500 |
0 |
| Other |
40,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
75,000,000 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill allows a county that contains within its boundaries a municipality participating in the Home Rule Pilot Program pursuant to W. Va. Code §8-1-5a, when the municipality has enacted a municipal sales tax, to enact a county sales tax equal to the municipal sales tax amount. The county sales tax would not be applicable to sales attributable to a municipality within the county that has enacted a municipal sales tax pursuant to W.Va. Code §8-1-5a.
The legislation does not address counties where no municipalities have enacted a municipal sales tax or those counties with only municipalities who have enacted a municipal sales tax under W.Va. Code §8-13C-4. In addition, the bill does not preclude the county from charging the tax in municipalities within its boundaries that have enacted a municipal sales tax pursuant to W.Va. Code §8-13C-4.
As of July 1, 2021, twenty-five of the fifty-five counties in West Virginia would qualify to impose a county sales tax. Per our interpretation, the additional county tax would generate roughly $75 million for the 25 eligible counties in FY2022. Revenues would vary significantly in future years based on the number and locations of new municipalities participating in the Municipal Home Rule Pilot Program which enact a municipal sales tax under W.Va. Code §8-1-5a.
Additional administrative costs incurred by the Tax Department would be $40,000 in FY2021, $154,500 in FY2022, $150,000 in FY2023 and $210,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to allow counties that contain municipalities with a home rule sales tax to also enact a sales tax equal to that of the municipality.
The bill allows a county that contains within its boundaries a municipality participating in the Municipal Home Rule Pilot Program pursuant to §8-1-5a of this code, where the municipality has enacted a municipal sales tax up to one percent, to enact a county sales tax equal to the municipal sales tax amount. W.Va. Code §8-1-5a permits a municipality participating in the Municipal Home Rule Pilot Program to enact a municipal sales tax up to one percent if it reduces or eliminates its municipal business and occupation tax. A municipality may also impose a municipal sales and use tax pursuant to W. Va. Code §8-13C-4, but this bill does not address those municipalities.
The bill mentions a county sales tax but does not mention the imposition of a county use tax. To avoid Constitutional concerns, the use tax should be applied on items subject to the sales tax. In addition, the bill states that a county sales tax authorized in this section is not applicable to a municipality with the county that has enacted a municipal sales tax pursuant to W.Va. Code §8-1-5a. The language is unclear. The bill does not exclude sales made in a municipality where the sales tax was enacted under W.Va. code §8-13C-4. This could result in double taxation in these municipalities. The differing treatment of municipalities with a substantially identical municipal sales and use tax, could cause Constitutional issues.
The bill requires the Tax Commissioner to administer, enforce and collect the tax in the same manner as the State Consumer Sales and Service and Use tax but two of the code citations are incorrect. The bill does not provide for a fee for the administration of the tax. The bill does not provide adequate notice to the Tax Department to administer the tax. There are notice requirements for local tax rate changes and for the Streamline Sales and Use Tax Agreement. This bill would effectively allow counties to impose a county tax without any reference or time for the notice requirements needed.
The bill also does not address how this new section applies in conjunction with W. Va. Code §7-27-1, et seq., the Let Our Counties Act Locally Act. Under that Article, counties are authorized to impose a sales and use tax, with a rate not to exceed one percent dedicated to funding local road projects. It is unclear whether a county could potentially have a 2% sales and use tax if it uses both provisions, which could cause the sales tax in some areas to increase to 9%.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov