FISCAL NOTE
Date Requested: January 13, 2022
Time Requested: 03:15 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1334 |
Introduced |
HB4075 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax
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 exempt rare earth metals and rare earth elements from taxation in West Virginia.
According to our interpretation, this bill impacts both Property Tax and Severance Tax on rare-earth elements. Rare earth elements which are also referred to as rare-earth metals or rare-earth oxides are defined in this bill as a set of 17 soft heavy metals including but not limited to yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, and scandium.
Under the provisions of this bill, rare earth elements would be valued at salvage value for Property Tax purposes. The State Tax Department cannot quantify the revenue loss associated with this proposal. Currently, there is no rare earth industry in the State. However, at least one rare earth business is planned for development at this time. Rare earth elements are recovered as an incidental part of the mining and use of coal. The provisions of this bill would provide for valuation of qualified property at salvage value for purposes of taxation. It is unclear how the allocation of mining equipment will be treated under the provisions of this bill.
Also, under the provisions of this bill, the special annual two cents per ton tax on coal production based on the federal Surface Mining Control and Reclamation Act of 1977, is not applicable to unmined rare earth metals and unmined rare earth elements. Therefore, the coal is subject to the special 2 cent per ton tax, but the rare earth elements that are part of the coal’s composition are exempt.
Additional administrative costs incurred by the State Tax Department due to the changes in the Severance Tax would be $1,000 in FY2022. Additional administrative costs to the State Tax Department and local governments to change the valuations for Property Tax purposes cannot be readily determined.
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 |
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):
According to our interpretation, this bill impacts both Property Tax and Severance Tax on rare-earth elements. Rare earth elements which are also referred to as rare-earth metals or rare-earth oxides are defined in this bill as a set of 17 soft heavy metals including but not limited to yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, and scandium.
Under the provisions of this bill, rare earth elements would be valued at salvage value for Property Tax purposes. The State Tax Department cannot quantify the revenue loss associated with this proposal. Currently, there is no rare earth industry in the State. However, at least one rare earth business is planned for development at this time. Rare earth elements are recovered as an incidental part of the mining and use of coal. The provisions of this bill would provide for valuation of qualified property at salvage value for purposes of taxation. It is unclear how the allocation of mining equipment will be treated under the provisions of this bill.
Also, under the provisions of this bill, the special annual two cents per ton tax on coal production based on the federal Surface Mining Control and Reclamation Act of 1977, is not applicable to unmined rare earth metals and unmined rare earth elements. Therefore, the coal is subject to the special 2 cent per ton tax, but the rare earth elements that are part of the coal’s composition are exempt.
Additional administrative costs incurred by the State Tax Department due to the changes in the Severance Tax would be $1,000 in FY2022. Additional administrative costs to the State Tax Department and local governments to change the valuations for Property Tax purposes cannot be readily determined.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov