FISCAL NOTE
Date Requested: January 16, 2020
Time Requested: 09:55 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1020 |
Introduced |
SB478 |
|
|---|
| CBD Subject: |
Economic Development, Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, 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 provide tax relief to encourage investment in motorsports entertainment complexes.
According to the provisions of this bill, a qualified company that makes a capital investment in any motorsports entertainment complex in the State within the five year period immediately following the approval of the application by the Tax Department would receive a Sales and Use Tax exemption on building materials, supplies, fixtures, and equipment for the construction repair or improvement of the planned motorsports entertainment complex. This proposed Sales and Use Tax exemption would remain effective for five years. After five years, the eligible company would return the Sales and Use Tax exemption certificate to the Tax Department and submit a report to the Tax Department detailing the actual expenditures made in West Virginia in connection with the investment. The eligible company would designate a member or representative of the company to work with the Tax Department on reporting of the investment.
There are fourteen racetracks in West Virginia located throughout the State. These State racetracks vary in length from 1/8 mile to 3 miles and are likely to have a wide range of capital investment amounts. Since this bill does not require a minimum investment requirement, the Sales and Use Tax exemption amounts would vary considerably, making it difficult to estimate the loss to the General Revenue Fund in FY2021 and in subsequent fiscal years. The Tax Commissioner may be required to approve all applications regardless of type or amount of planned investment absent greater guidance within the bill.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2021 and $5,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
5,000 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to the provisions of this bill, a qualified company that makes a capital investment in any motorsports entertainment complex in the State within the five year period immediately following the approval of the application by the Tax Department would receive a Sales and Use Tax exemption on building materials, supplies, fixtures, and equipment for the construction repair or improvement of the planned motorsports entertainment complex. This proposed Sales and Use Tax exemption would remain effective for five years. After five years, the eligible company would return the Sales and Use Tax exemption certificate to the Tax Department and submit a report to the Tax Department detailing the actual expenditures made in West Virginia in connection with the investment. The eligible company would designate a member or representative of the company to work with the Tax Department on reporting of the investment.
There are fourteen racetracks in West Virginia located throughout the State. These State racetracks vary in length from 1/8 mile to 3 miles and are likely to have a wide range of capital investment amounts. Since this bill does not require a minimum investment requirement, the Sales and Use Tax exemption amounts would vary considerably, making it difficult to estimate the loss to the General Revenue Fund in FY2021 and in subsequent fiscal years. The Tax Commissioner may be required to approve all applications regardless of type or amount of planned investment absent greater guidance within the bill.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2021 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide tax relief to encourage investment in motorsports entertainment complexes.
There are some concerns with this proposed Sales and Use Tax exemption. This bill appears to create a Sales and Use Tax exemption for any company that provides “a practical plan to make a capital investment on any motorsports entertainment complex in this state.” The bill creates a “sales tax exemption certificate” that is to be issued by the State Tax Department. The proposed Sales and Use Tax exemption wrongly refers to the name of the agency as the Department of Tax and Revenue and does not appear to offer the special contractor’s exemption, which may severely hamper the effectiveness of this provision.
It also cannot be determined how a design would qualify as a an officially sanctioned motor speedway and who would determine that designation. It is also not certain in this bill the level of official motorsports regulation that would be necessary to properly implement this legislation.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov