FISCAL NOTE
Date Requested: January 24, 2023
Time Requested: 04:45 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1859 |
Introduced |
HB3012 |
|
|---|
| CBD Subject: |
Economic Development |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
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 encourage economic development regarding rare earth elements and critical minerals, as defined, by providing temporary severance tax relief.
According to our interpretation of this bill, this bill exempts rare earth elements and critical minerals from Severance Tax for a period of twelve years beginning July 1, 2023. The bill defines rare earth elements and other critical minerals such as scandium, yttrium, lanthanum, etc. that are essential to the economy whose supply may be disrupted, including, without limitation, metals such as lithium, cobalt, manganese, indium, tellurium, gallium, and platinum group elements. China currently controls most of the rare earth minerals market, a broad group of 17 elements that are used to produce items such as smartphones and fighter jets. According to the West Virginia Water Research Institute, nearly 600 metric tons of rare earth elements and cobalt could be produced annually by acid mine drainage extraction. West Virginia currently receives no Severance Tax proceeds from rare earth minerals as described within the bill. Under the assumption that the proposed exemption would only apply to rare earth minerals and not to “other” currently taxable natural resources “that are essential to the economy”, passage of this bill would not have a negative impact on General Revenue Fund collections.
Additional administrative costs incurred by the State Tax Department would be $1,000 in FY2024.
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 |
0 |
1,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
1,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, this bill exempts rare earth elements and critical minerals from Severance Tax for a period of twelve years beginning July 1, 2023. The bill defines rare earth elements and other critical minerals such as scandium, yttrium, lanthanum, etc. that are essential to the economy whose supply may be disrupted, including, without limitation, metals such as lithium, cobalt, manganese, indium, tellurium, gallium, and platinum group elements. China currently controls most of the rare earth minerals market, a broad group of 17 elements that are used to produce items such as smartphones and fighter jets. According to the West Virginia Water Research Institute, nearly 600 metric tons of rare earth elements and cobalt could be produced annually by acid mine drainage extraction. West Virginia currently receives no Severance Tax proceeds from rare earth minerals as described within the bill. Under the assumption that the proposed exemption would only apply to rare earth minerals and not to “other” currently taxable natural resources “that are essential to the economy”, passage of this bill would not have a negative impact on General Revenue Fund collections.
Additional administrative costs incurred by the State Tax Department would be $1,000 in FY2024.
Memorandum
The stated purpose of this bill is to encourage economic development regarding rare earth elements and critical minerals, as defined, by providing temporary severance tax relief.
The tax imposed by W.Va. Code §11-13A-3e, on extracting and recovering material from refuse, gob piles, or other sources of waste coal to produce coal is not currently included in this bill. Waste coal is separately taxed under §11-13A-3e of the West Virginia Code.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov