FISCAL NOTE

Date Requested: January 21, 2019
Time Requested: 01:35 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2005 Introduced HB2548
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue, Creates New Expense



Fiscal Note Summary


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


The stated purpose of this bill is to create a healthy living tax credit against the personal income tax. The proposed bill would create a healthy living tax credit equal to 100 percent of the amount paid by the taxpayer for qualified expenses related to healthy living, up to $1,000. Qualified expenses related to healthy living include the purchase of exercise equipment, the cost of gym membership, classes that involve physical activity and other expenses as determined by the Tax Commissioner. The tax credit is nonrefundable; however, the credit may be carried over if the taxpayer was unable to deduct the entire credit. According to our interpretation, the proposed tax credit would reduce General Revenue Fund collections by roughly $80 million to $100 million in FY2021. Due to the limited data available and the structure of the proposed tax credit we are unable to provide an exact estimate with confidence and actual reductions in collections can deviate substantially from the provided range. Additional administrative costs incurred by the State Tax Department would be $138,000 in FY2021 and $120,000 in subsequent fiscal years. 



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 120,000
Personal Services 0 0 120,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


The proposed bill would create a healthy living tax credit equal to 100 percent of the amount paid by the taxpayer for qualified expenses related to healthy living, up to $1,000. Qualified expenses related to healthy living include the purchase of exercise equipment, the cost of gym membership, classes that involve physical activity and other expenses as determined by the Tax Commissioner. The tax credit is nonrefundable; however, the credit may be carried over if the taxpayer was unable to deduct the entire credit. According to our interpretation, the proposed tax credit would reduce General Revenue Fund collections by roughly $80 million to $100 million in FY2021. Due to the limited data available and the structure of the proposed tax credit we are unable to provide an exact estimate with confidence and actual reductions in collections can deviate substantially from the provided range. Additional administrative costs incurred by the State Tax Department would be $138,000 in FY2021 and $120,000 in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to create a healthy living tax credit against the personal income tax. The standards provided in this bill of “qualified expenses related to healthy living” are vague. Subsection (c) of this bill references a “joint individual” return, which is not an appropriate filing status. Subsection (b) of this bill does not specify the period that the credit can be carried forward. The bill does not provide for a sunset provision or periodic reports to the Legislature.



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