FISCAL NOTE

Date Requested: January 20, 2016
Time Requested: 04:03 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1435 Introduced HB4181
CBD Subject: Tax


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to increase the excise tax on cigarettes and other tobacco products. The effective date for the increase in the cigarette tax is not stated. Assuming that the effective date is the same as the effective date for the rate increase for other tobacco products (January 1, 2017), an increase in the cigarette tax from $0.55 to $1.55 and an increase in the rate of tax on other tobacco products from 7 percent to 39 percent of the wholesale price would increase revenue by $53.9 million in FY 2017 and up to $129.3 million in FY2018 and each year thereafter. Some decrease in consumption may occur prior to the increase in tax rates for both products, as consumers may stockpile tobacco products at lower prices before the tax rate increases, further affecting revenues. The administrative costs to the Tax Department will be $21,000 for both Fiscal Years 2016 and 2017. 



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 21,000 21,000 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 21,000 21,000 0
2. Estimated Total Revenues 0 53,900,000 129,300,000


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


The effective date for the increase in the cigarette tax is not stated. Assuming that the effective date is the same as the effective date for the rate increase for other tobacco products (January 1, 2017), an increase in the cigarette tax from $0.55 to $1.55 and an increase in the rate of tax on other tobacco products from 7 percent to 39 percent of the wholesale price would increase revenue by $53.9 million in FY 2017 and up to $129.3 million in FY2018 and each year thereafter. Some decrease in consumption may occur prior to the increase in tax rates for both products, as consumers may stockpile tobacco products at lower prices before the tax rate increases, further affecting revenues. The administrative costs to the Tax Department will be $21,000 for both Fiscal Years 2016 and 2017.



Memorandum


The stated purpose of this bill is to increase the excise tax on cigarettes and other tobacco products. The bill strikes the current rates and effective dates. There is no code to establish the rate until January 1, 2017. The bill does not provide an effective date for the increase in the cigarette tax rate.



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