FISCAL NOTE

Date Requested: January 20, 2023
Time Requested: 08:36 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1329 Introduced HB2163
CBD Subject:


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 reduce the 40 percent limitation of tax credit allowed for manufacturing investment to 25 percent. According to our interpretation of this bill, for tax years beginning on and after January 1, 2023, the tax credit offset for the Manufacturing Investment Tax Credit would be increased from up to 60 percent of Severance Tax and Corporation Net Income Tax liabilities to 75 percent. Many of the qualified Manufacturing Investment Tax Credit taxpayers who pay Severance Tax were in the limestone or sandstone industry. The Severance Tax on limestone or sandstone terminated on July 1, 2019; therefore, the proposed changes to the Manufacturing Investment Tax Credit will primarily be related to Corporation Net Income Tax credit offsets. The Manufacturing Investment Tax Credit currently reduces General Revenue Fund collections by an estimated $2.0 million per year. Passage of this bill would result in an additional loss of $0.5 million to the General Revenue Fund in FY2025 and thereafter. Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2023. 



Fiscal Note Detail


Effect of Proposal Fiscal Year
2023
Increase/Decrease
(use"-")
2024
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 10,000 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 10,000 0 0
2. Estimated Total Revenues 0 0 -500,000


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


According to our interpretation of this bill, for tax years beginning on and after January 1, 2023, the tax credit offset for the Manufacturing Investment Tax Credit would be increased from up to 60 percent of Severance Tax and Corporation Net Income Tax liabilities to 75 percent. Many of the qualified Manufacturing Investment Tax Credit taxpayers who pay Severance Tax were in the limestone or sandstone industry. The Severance Tax on limestone or sandstone terminated on July 1, 2019; therefore, the proposed changes to the Manufacturing Investment Tax Credit will primarily be related to Corporation Net Income Tax credit offsets. The Manufacturing Investment Tax Credit currently reduces General Revenue Fund collections by an estimated $2.0 million per year. Passage of this bill would result in an additional loss of $0.5 million to the General Revenue Fund in FY2025 and thereafter. Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2023.



Memorandum






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