FISCAL NOTE
Date Requested: February 07, 2022
Time Requested: 12:52 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2563 |
Introduced |
HB4558 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 credit to production companies who produce Esports events within the state.
This bill would provide a tax credit to a production company that has qualifying expenses of at least $250,000. The bill defines Esports as a form of competition using video games, often taking the form of organized multiplayer video game competitions, particularly between professional players, individually or as teams. The tax credit would be equal to 25 percent of the company’s qualifying expenses. The credit would be calculated based on all of the production company’s expenses incurred for the production as opposed to the qualifying expenses during the taxable year. This is a refundable tax credit. The amount of credit allowed for a feature film production may not exceed $20 million. There is otherwise no maximum amount of the tax credit. This bill does not have an effective date.
Approximately four other states offer a similar tax credit, including Pennsylvania, North Carolina, and Hawaii. Additionally, Georgia has Esports provisions within its more broadly defined film tax credit legislation. Pennsylvania imposes a cap on the credit of $1 million per year and this limit has been reached over the past few fiscal years. This type of credit is an emerging concept with little data available for analysis. In addition, the provisions of this bill lack clarity with regard to calculation of tax credit and taxes to be offset by tax credits. Therefore, we cannot accurately estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2023 and $5,000 in subsequent fiscal years.
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 |
20,000 |
5,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
20,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would provide a tax credit to a production company that has qualifying expenses of at least $250,000. The bill defines Esports as a form of competition using video games, often taking the form of organized multiplayer video game competitions, particularly between professional players, individually or as teams. The tax credit would be equal to 25 percent of the company’s qualifying expenses. The credit would be calculated based on all of the production company’s expenses incurred for the production as opposed to the qualifying expenses during the taxable year. This is a refundable tax credit. The amount of credit allowed for a feature film production may not exceed $20 million. There is otherwise no maximum amount of the tax credit. This bill does not have an effective date.
Approximately four other states offer a similar tax credit, including Pennsylvania, North Carolina, and Hawaii. Additionally, Georgia has Esports provisions within its more broadly defined film tax credit legislation. Pennsylvania imposes a cap on the credit of $1 million per year and this limit has been reached over the past few fiscal years. This type of credit is an emerging concept with little data available for analysis. In addition, the provisions of this bill lack clarity with regard to calculation of tax credit and taxes to be offset by tax credits. Therefore, we cannot accurately estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2023 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a tax credit to production companies who produce Esports events within the state.
This bill fails to adequately describe or identify several items throughout the body of the bill: “tax credit,” “tax imposed,” and “secretary.” The bill allows an unspecified credit to be applied against unspecified taxes.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov