FISCAL NOTE
Date Requested: January 24, 2022
Time Requested: 04:33 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2198 |
Introduced |
SB467 |
|
|---|
| CBD Subject: |
Economic Development |
|---|
|
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 tax relief to encourage investment in motorsports entertainment complexes.
According to the provisions of this bill, a qualified company that makes a capital investment in any motorsports entertainment complex in the State within the five-year period immediately following the approval of the application by the Tax Department would receive a Sales and Use Tax exemption on building materials, supplies, fixtures, and equipment for the construction repair or improvement of the planned motorsports entertainment complex. This proposed Sales and Use Tax exemption would remain effective for five years. After five years, the eligible company would return the Sales and Use Tax exemption certificate to the Tax Department and submit a report to the Tax Department detailing the actual expenditures made in West Virginia in connection with the investment. The eligible company would designate a member or representative of the company to work with the Tax Department on reporting of the investment.
There are eight racetracks in West Virginia located throughout the State. These State racetracks vary in length from 1/8 mile to 3 miles and are likely to have a wide range of capital investment amounts. Since this bill does not contain a minimum investment requirement, the Consumers Sales and Use Tax exemption amounts would vary considerably, making it difficult to estimate the loss to the General Revenue Fund in FY2023 and subsequent fiscal years. The Tax Commissioner may be required to approve all applications regardless of type or amount of planned investment absent greater guidance within the bill.
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2023.
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 |
5,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to the provisions of this bill, a qualified company that makes a capital investment in any motorsports entertainment complex in the State within the five-year period immediately following the approval of the application by the Tax Department would receive a Sales and Use Tax exemption on building materials, supplies, fixtures, and equipment for the construction repair or improvement of the planned motorsports entertainment complex. This proposed Sales and Use Tax exemption would remain effective for five years. After five years, the eligible company would return the Sales and Use Tax exemption certificate to the Tax Department and submit a report to the Tax Department detailing the actual expenditures made in West Virginia in connection with the investment. The eligible company would designate a member or representative of the company to work with the Tax Department on reporting of the investment.
There are eight racetracks in West Virginia located throughout the State. These State racetracks vary in length from 1/8 mile to 3 miles and are likely to have a wide range of capital investment amounts. Since this bill does not contain a minimum investment requirement, the Consumers Sales and Use Tax exemption amounts would vary considerably, making it difficult to estimate the loss to the General Revenue Fund in FY2023 and subsequent fiscal years. The Tax Commissioner may be required to approve all applications regardless of type or amount of planned investment absent greater guidance within the bill.
Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2023.
Memorandum
The stated purpose of this bill is to provide tax relief to encourage investment in motorsports entertainment complexes.
In 2019, a similar bill was introduced, but with a minimum $10 million capital investment requirement within a five-year period. There was also a “claw back” provision to recover sales taxes that would have been paid without the exemption certificate. This bill sets no minimum investment and requires no recovery mechanism for sales taxes.
The criteria for determining how a particular facility qualifies as an official motor speedway or racetrack is unclear. It is not clear what makes a speedway official and who would determine that. From the bill, it appears that these determinations are within the Tax Department’s discretion
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov