FISCAL NOTE

Date Requested: February 15, 2022
Time Requested: 05:11 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2808 Introduced HB4689
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 for the creation of an “EV Manufacturers Investment Credit.” The bill provides for definitions. The bill establishes tier 1 eligibility, credits, and exemptions. The bill establishes tier 2 eligibility, credits, and exemptions. The bill provides for the forfeiture of unused tax credits. Finally, the bill provides for the redetermination of credit allowed. This bill would allow for two tax credits for electric vehicle manufacturers. The Tier 1 tax credit is a credit for electric vehicle manufacturers, electric vehicle component part manufacturers and electric vehicle power supply equipment manufacturers that invest over $20 million in capital investments and create more than 50 new jobs withing four years. The credit is equal to 75 percent of the income tax withholdings of new jobs created in this state. This could increase to 100 percent for electric vehicle manufacturing projects that are located in priority areas. Created jobs that are retained would qualify for additional income tax withholding credits. A non-refundable tax credit would be provided that is equal to ten percent of eligible training costs for full-time new and retained employees. Tier 2 tax credits are for elective vehicle manufacturers that invest at least $1 billion in capital investments and create over 500 new jobs within five years, electric vehicle component part manufactures that vest at least $200 million in capital investments and create over 100 jobs within five years, or manufacturers that are converting existing facilities to allow for production of electric vehicles or electric vehicles component parts or electric vehicle power supplies that invest $100 million in capital investments and create over 75 new jobs or new jobs equivalent to 10 percent of their statewide baseline, whichever is less. These eligible electric vehicle manufacturers would be eligible all credits made available in W. Va. Code §11-13MM-2, an exemption from taxes paid on building materials for up to five years, and a non-refundable income tax credit equal to 2 percent of investment in qualified property. We cannot accurately estimate the revenue impact of this bill. The provisions of this bill would only affect future investments by these types of manufacturers. Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2023 and $10,000 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 45,000 10,000
Personal Services 0 20,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 25,000 0
2. Estimated Total Revenues 0 0 0


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


This bill would allow for two tax credits for electric vehicle manufacturers. The Tier 1 tax credit is a credit for electric vehicle manufacturers, electric vehicle component part manufacturers and electric vehicle power supply equipment manufacturers that invest over $20 million in capital investments and create more than 50 new jobs withing four years. The credit is equal to 75 percent of the income tax withholdings of new jobs created in this state. This could increase to 100 percent for electric vehicle manufacturing projects that are located in priority areas. Created jobs that are retained would qualify for additional income tax withholding credits. A non-refundable tax credit would be provided that is equal to ten percent of eligible training costs for full-time new and retained employees. Tier 2 tax credits are for elective vehicle manufacturers that invest at least $1 billion in capital investments and create over 500 new jobs within five years, electric vehicle component part manufactures that vest at least $200 million in capital investments and create over 100 jobs within five years, or manufacturers that are converting existing facilities to allow for production of electric vehicles or electric vehicles component parts or electric vehicle power supplies that invest $100 million in capital investments and create over 75 new jobs or new jobs equivalent to 10 percent of their statewide baseline, whichever is less. These eligible electric vehicle manufacturers would be eligible all credits made available in W. Va. Code §11-13MM-2, an exemption from taxes paid on building materials for up to five years, and a non-refundable income tax credit equal to 2 percent of investment in qualified property. We cannot accurately estimate the revenue impact of this bill. The provisions of this bill would only affect future investments by these types of manufacturers. Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2023 and $10,000 in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to provide for the creation of an “EV Manufacturers Investment Credit.” The bill provides for definitions. The bill establishes tier 1 eligibility, credits, and exemptions. The bill establishes tier 2 eligibility, credits, and exemptions. The bill provides for the forfeiture of unused tax credits. Finally, the bill provides for the redetermination of credit allowed. The bill fails to address whether the “employee withholding taxes” that are withheld and not remitted are to be nevertheless credited against the employee’s income tax liability. If the employee is not credited for the withheld income, then the employee is essentially forced to fund the employer by way of double taxation, paying once to the employer and once to the state. The first tier provides “a non-refundable income tax credit equal to 50 percent of the amount of incremental income tax attributable to the construction wages paid in connection with construction of the project facilities. This percentage increases to 75 percent for projects that locate in priority areas …” The term “incremental income tax” is not defined. In subdivision (1), the 15-year allowance is in direct conflict with the tier one provision that “no manufacturer may benefit from any of the tax credits in this section for more than 10 years.” In subdivision (2), there is no identification of what taxes the exemption applies to, and no determination of when the five years starts and whether the five years are consecutive. In subdivision (3), the “income tax credit” could be charitably considered a credit against either the corporation net income tax or the personal income tax; but the term “qualified property” is not defined.



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