FISCAL NOTE
Date Requested: January 14, 2016
Time Requested: 12:56 PM |
| Agency: |
Tax Department, State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1328 |
Introduced |
SB16 |
|
|---|
| 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 generally to provide a tax credit for providing broadband to certain extremely high-cost census blocks. The bill requires the Tax Commissioner to propose rules for legislative approval to administer this article. It also provides definitions; determines the amount of credit; provides how the credit is taken and its application; including an annual cap on the credit and prohibition against a carryover or carryback to subsequent or previous tax years.
According to our interpretation, this bill would grant a credit against the corporate net income tax liability of any eligible taxpayer who provides broadband Internet service to locations within extremely high-cost census blocks in West Virginia. The amount of the tax credit available to these eligible taxpayers is $500 for each State location within extremely high-cost census blocks, to which the eligible taxpayer had made broadband service available.
This credit is capped at $1.0 million per year. It is unclear whether this amount is $1.0 million per claimant or $1.0 million for all the claimants in the aggregate for the year. If the credit cap is an aggregate cap of $1.0 million per tax year, there would be a loss of up to $1.0 million per year beginning as early as FY2018. Due to the lack of an internal effective date, the provisions of this bill would first become effective for tax years beginning after the effective date of the legislation. If the cap applies on a taxpayer basis, then the potential cost could exceed $1.0 million in some future years. According to data from the FCC, there are 5,011 extremely high-cost census block locations within West Virginia.
Additional administrative costs incurred by the State Tax Department would be $13,990 in FY 2017 and $8,990 in FY 2018 and thereafter.
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 |
0 |
13,990 |
13,990 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
8,990 |
8,990 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Passage of this bill would provide a tax credit for providing broadband to certain extremely high-cost census blocks. The bill requires the Tax Commissioner to propose rules for legislative approval to administer this article. It also provides definitions; determines the amount of credit; provides how the credit is taken and its application; including an annual cap on the credit and prohibition against a carryover or carryback to subsequent or previous tax years.
According to our interpretation, this bill would grant a credit against the corporate net income tax liability of any eligible taxpayer who provides broadband Internet service to locations within extremely high-cost census blocks in West Virginia. The amount of the tax credit available to these eligible taxpayers is $500 for each State location within extremely high-cost census blocks, to which the eligible taxpayer had made broadband service available.
This credit is capped at $1.0 million per year. It is unclear whether this amount is $1.0 million per claimant or $1.0 million for all the claimants in the aggregate for the year. If the credit cap is an aggregate cap of $1.0 million per tax year, there would be a loss of up to $1.0 million per year beginning as early as FY2018. Due to the lack of an internal effective date, the provisions of this bill would first become effective for tax years beginning after the effective date of the legislation. If the cap applies on a taxpayer basis, then the potential cost could exceed $1.0 million in some future years. According to data from the FCC, there are 5,011 extremely high-cost census block locations within West Virginia.
Additional administrative costs incurred by the State Tax Department would be $13,990 in FY 2017 and $8,990 in FY 2018 and thereafter.
Memorandum
The stated purpose of this bill is generally to provide a tax credit for providing broadband to certain extremely high-cost census blocks. The bill requires the Tax Commissioner to propose rules for legislative approval to administer this article. It also provides definitions; determines the amount of credit; provides how the credit is taken and its application; including an annual cap on the credit and prohibition against a carryover or carryback to subsequent or previous tax years.
The text of the bill in sections 3 and 6 contains contradictory language on credit carryover. Therefore, the title of the bill is defective.
The definition of the term “broadband or broadband service” differs from the definition set forth in West Virginia Code §31-15C-2. The term “advanced telecommunications capability” is not defined in the bill or in West Virginia Code.
There needs to be more clarity on how high-cost census block locations are defined in terms of the $500 broadband credit per household or business location. It is not clear if, for example, an apartment building is wired for Wi-Fi and one Wi-Fi hub serves 200 customers, whether the credit would be for 200 locations or one location.
This credit is capped at $1.0 million per year. However it is unclear whether this amount is $1.0 million per claimant or $1.0 million for all the claimants in the aggregate for the year. If it is an aggregate cap, there is no definition as to how the cap is supposed to be implemented.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov