FISCAL NOTE

Date Requested: February 11, 2016
Time Requested: 02:49 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1965 Introduced HB4494
CBD Subject: Taxation


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 tobacco products, to impose tax resulting from a rate change on inventories, to specify due dates for payment of tax resulting from a rate change on cigarette stamps, to levy a tax upon e-cigarette liquid, to provide for the administration and enforcement of the tax on e-cigarette liquid, all effective April 1, 2016. The bill increases the tax on cigarettes from $.55 to $1.00, increases the rate of tax on tobacco products other than cigarettes from seven percent of the wholesale price to twelve percent, and establishes a new tax of $.075 per milliliter of e-cigarette liquid. The increases and the new rate have been incorporated into the Governor’s official revenue estimates for FY2017. The official estimates for the above changes are as follows: Cigarettes: $71.5 million Other Tobacco Products: $ 4.7 million E-Cigarette Fluid: $ 1.8 million Total: $78.0 million The effective date of April 1, 2016 allows some funds to be collected in the current fiscal year to balance the FY2016 budget. Though the increase in funds will be modest at first, as consumers may adjust their consumption to avoid paying the higher tax rates, revenues should increase enough to provide some deficit reduction. The increased tax rates will increase FY2016 collections by approximately $18.9 million. Administrative costs to the Tax Department will be $43,000 in the current Fiscal Year, $40,500 in FY2017, and $35,000 in each year 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 43,000 40,500 35,000
Personal Services 3,300 35,000 35,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 5,500 0
Other 40,000 0 0
2. Estimated Total Revenues 0 0 0


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


The bill increases the tax on cigarettes from $.55 to $1.00, increases the rate of tax on tobacco products other than cigarettes from seven percent of the wholesale price to twelve percent, and establishes a new tax of $.075 per milliliter of e-cigarette liquid. The increases and the new rate have been incorporated into the Governor’s official revenue estimates for FY2017. The official estimates for the above changes are as follows: Cigarettes: $71.5 million Other Tobacco Products: $ 4.7 million E-Cigarette Fluid: $ 1.8 million Total: $78.0 million The effective date of April 1, 2016 allows some funds to be collected in the current fiscal year to balance the FY2016 budget. Though the increase in funds will be modest at first, as consumers may adjust their consumption to avoid paying the higher tax rates, revenues should increase enough to provide some deficit reduction. The increased tax rates will increase FY2016 collections by approximately $18.9 million. Administrative costs to the Tax Department will be $43,000 in the current Fiscal Year, $40,500 in FY2017, and $35,000 in each year thereafter.



Memorandum






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