COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 357
(By Senators Boley and Burdette, Mr. President)
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[Originating in the Committee on Finance;
reported February 25, 1994.]
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A BILL to amend and reenact sections two-d, two-m and two-n,
article thirteen, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
relating to state business and occupation taxes; exempting
from certain of those taxes the gross income received by
electric power generating plants owned by municipalities
incorporated under the laws of this state; and exempting
from those taxes kilowatt hours of electricity generated and
sold, or purchased and resold, by plants owned by
municipalities incorporated under the laws of this state.
Be it enacted by the Legislature of West Virginia:
That sections two-d, two-m and two-n, article thirteen,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted to read
as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
§11-13-2d. Public service or utility business.
(a) Upon any person engaging or continuing within this state
in any public service or utility business, except railroad,
railroad car, express, pipeline, telephone and telegraph
companies, water carriers by steamboat or steamship and motor
carriers, the tax imposed by section two of this article shall be
equal to the gross income of the business derived from such
activity or activities multiplied by the respective rates as
follows:
(1) Street and interurban and electric railways, one and
four-tenths percent;
(2) Water companies, four and four-tenths percent, except as
to income received by municipally-owned water plants;
(3) Electric light and power companies, four percent on
sales and demand charges for domestic purposes and commercial
lighting and four percent on sales and demand charges for all
other purposes, and except as to income received by plants that
are owned by municipalities incorporated under the laws of this
state and which produce or purchase electricity and distribute
the same:
Provided, That electric light and power companies
which engage in the supplying of public service but which do not
generate or produce in this state the electric power they supply
shall be taxed on the gross income derived from sales of power
which they do not generate in this state at the rate of three
percent on sales and demand charges for domestic purposes and
commercial lighting and three percent on sales and demand charges
for all other purposes, except as to income received by plants
owned by municipalities incorporated under the laws of this
state:
Provided, however, That the sale of electric power underthis section shall be taxed at the rate of two percent on that
portion of the gross proceeds derived from the sale of electric
power to a plant location of a customer engaged in a
manufacturing activity, if the contract demand at such plant
location exceeds two hundred thousand kilowatts per hour per
year, or if the usage of such plant location exceeds two hundred
thousand kilowatts per hour in a year:
Provided further, That
the sale of electric power under this section shall be exempt
from the tax imposed by this section and section two of this
article if it is separately metered and consumed in an
electrolytic process for the manufacture of chlorine in this
state, or is separately metered and consumed in the manufacture
of ferroalloy in this state, and the rate reduction herein
provided to the taxpayer shall be passed on to the manufacturer
of the chlorine or ferroalloy. As used in this section, the term
"ferroalloy" means any of various alloys of iron and one or more
other elements used as a raw material in the production of steel:
And provided further, That the term does not include the final
production of steel;
(4) Natural gas companies, four and twenty-nine hundredths
percent on the gross income:
Provided, That the sale of natural
gas under this section shall be exempt from the tax imposed by
this section and section two of this article to the extent that
the natural gas is separately metered and is gas from which the
purchaser derives hydrogen and carbon monoxide for use in the
manufacture of chemicals in this state and the full economic
benefit of the exception herein provided to the taxpayer shall be
passed on to such purchaser of the natural gas:
Provided,however, That there shall be no exemption for the sale of any
natural gas from which the purchaser derives carbon monoxide or
hydrogen for the purpose of resale;
(5) Toll bridge companies, four and twenty-nine hundredths
percent; and
(6) Upon all other public service or utility business, two
and eighty-six hundredths percent.
(b) The measure of this tax shall not include gross income
derived from commerce between this state and other states of the
United States or between this state and foreign countries. The
measure of the tax under this section shall include only gross
income received from the supplying of public service. The gross
income of the taxpayer from any other activity shall be included
in the measure of the tax imposed upon such other activity by the
appropriate section or sections of this article.
(c) Beginning the first day of March, one thousand nine
hundred eighty-nine, electric light and power companies shall
determine their liability for payment of tax under this section
and sections two-m and two-n of this article. If for taxable
months beginning on or after the first day of March, one thousand
nine hundred eighty-nine, liability for tax under section two-n
of this article is equal to or greater than the sum of the power
company's liability for payment of tax under subdivision (3),
subsection (a) of this section and section two-m of this article,
then the company shall pay the tax due under section two-n of
this article and not the tax due under subdivision (3),
subsection (a) of this section and section two-m of this article.
If tax liability under section two-n of this article is less,then tax shall be paid under subdivision (3), subsection (a) of
this section and section two-m of this article and the tax due
under section two-n of this article shall not be paid. The
provisions of subdivision (3), subsection (a) of this section
shall expire and become null and void for taxable years beginning
on or after the first day of January, one thousand nine hundred
ninety-eight.
§11-13-2m. Business of generating or producing electric power;
exception; rates.
(a) Upon every person engaging or continuing within this
state in the business of generating or producing electric power
for sale, profit or commercial use, either directly or through
the activity of others, in whole or in part, when the sale
thereof is not subject to tax under section two-d of this
article, the amount of the tax shall be equal to the value of the
electric power, as shown by the gross proceeds derived from the
sale thereof by the generator or producer of the same multiplied
by a rate of four percent, except that the rate shall be two
percent on that portion of the gross proceeds derived from the
sale of electric power to a plant location of a customer engaged
in a manufacturing activity, if the contract demand at such plant
location exceeds two hundred thousand kilowatts per hour per
year, or if the usage at such plant location exceeds two hundred
thousand kilowatts per hour in a year.
(b) The measure of this tax shall be the value of all
electric power generated or produced in this state for sale,
profit or commercial use, regardless of the place of sale or the
fact that transmission may be to points outside this state:
Provided, That the gross income received by plants that are owned
by municipalities incorporated under the laws of this state and
which generate or produce electricity shall not be subject to tax
under this article.
(c) Beginning the first day of March, one thousand nine
hundred eighty-nine, every person taxable under this section
shall determine their liability for payment of tax under this
section and under subdivision (3), subsection (a), section two-d
of this article and section two-n of this article. If for
taxable months beginning on or after the first day of March, one
thousand nine hundred eighty-nine such person's liability for
payment of tax under this section and subdivision (3), subsection
(a), section two-d of this article is less than the amount of
such person's liability for payment of tax under section two-n of
this article, then such person shall pay the tax due under said
section and not the sum of the amount of tax due under this
section and under subdivision (3), subsection (a), section two-d
of this article. If the tax due under section two-n of this
article is less, then the amount of tax due under this section
and subdivision (3), subsection (a), section two-d of this
article shall be paid. The provisions of this section shall
expire and become null and void for taxable years beginning on or
after the first day of January, one thousand nine hundred
ninety-eight.
§11-13-2n. Business of generating or producing or selling
electric power; exemptions; rates.
(a)
Rate of tax. -- Upon every person engaging or continuing
within this state in the business of generating or producingelectricity for sale, profit or commercial use, either directly
or indirectly through the activity of others, in whole or in
part, or in the business of selling electricity to consumers, or
in both businesses, the tax imposed by section two of this
article shall be equal to:
(1) Twenty-six hundredths of one cent times the kilowatt
hours of net generation available for sale that was generated or
produced in this state by the taxpayer during the taxable year,
except that this rate shall be five hundredths of one cent times
the kilowatt hours of net generation available for sale that was
generated or produced in this state by the taxpayer and sold to
a plant location of a customer engaged in manufacturing activity
if the contract demand at such plant location exceeds two hundred
thousand kilowatts per hour per year or if the usage at such
plant location exceeds two hundred thousand kilowatts per hour in
a year:
Provided, That in order to encourage the development of
industry to improve the environment of this state, the tax
imposed by this section on any person generating or producing
electric power and an alternative form of energy at a facility
located within this state substantially from gob or other mine
refuse shall be equal to five hundredths of one cent times the
kilowatt hours of net generation or production available for
sale. The measure of tax under this subdivision shall be equal
to the total kilowatt hours of net generation available for sale
that was generated or produced in this state by the taxpayer
during the taxable year, regardless of the place of sale or use,
or the fact that transmission may be made to points outside this
state.
(2) Nineteen hundredths of one cent times the kilowatt hours
of electricity sold to consumers in this state that were not
generated or produced in this state by the taxpayer, except that
the rate shall be five hundredths of one cent times the kilowatt
hours of electricity not generated or produced in this state by
the taxpayer which is sold to a plant location in this state of
a customer engaged in manufacturing activity if the contract
demand at such plant location exceeds two hundred thousand
kilowatts per hour per year or if the usage at such plant
location exceeds two hundred thousand kilowatts per hour in a
year. The measure of tax under this subdivision shall be equal
to the total kilowatt hours of electricity sold to consumers in
this state during the taxable year, that were not generated or
produced in this state by the taxpayer, to be determined by
subtracting from the total kilowatt hours of electricity sold to
consumers in the state the net kilowatt hours of electricity
generated or produced in the state by the taxpayer during the
taxable year.
The West Virginia public service commission shall, upon
application of a public utility, allow an immediate pass-through
to the utility's customers in this state in the form of a rate
surcharge the increase enacted by the Legislature during its
third extraordinary session, one thousand nine hundred ninety, in
the tax imposed by this article upon electricity generated or
produced in this state and sold to consumers in this state and
upon electricity not generated or produced in this state that is
sold to consumers in this state.
(b)
Exemptions. -- The provisions of this section shall notapply to:
(1) Kilowatt hours of electricity generated and sold, or
purchased and resold, by plants owned by municipalities
incorporated under the laws of this state.
(2) Kilowatt hours of electric power that are separately
metered and consumed in an electrolytic process for the
manufacture of chlorine.
(3) Kilowatt hours of electric power that are separately
metered and consumed in the manufacture of ferroalloy. As used
in this subdivision, the term "ferroalloy" means any of the
various alloys of iron and one or more other elements used as a
raw material in the production of steel but shall not include
electric power used in the production of steel.
(4) The full economic benefits provided to the taxpayer by
subdivisions (2) and (3) of this subsection shall be passed on to
the manufacturer of the chlorine or ferroalloy.
(c)
Credit. -- Any person taxable under subdivision (2),
subsection (a) of this section shall be allowed a credit against
the amount of tax due under said subdivision for any electric
power generation taxes paid by the taxpayer with respect to such
electric power to the state in which such power was generated or
produced. The amount of credit allowed shall not exceed the tax
liability arising under said subdivision with respect to the sale
of such power.
(d)
Transition rule. -- Beginning the first day of March,
one thousand nine hundred eighty-nine, electric light and power
companies shall determine their liability for payment of tax
under this section and sections two-d and two-m of this article. If for taxable months beginning on or after the first day of
March, one thousand nine hundred eighty-nine, liability for tax
under this section is equal to or greater than the sum of the
power company's liability for payment of tax under subdivision
(3), subsection (a), section two-d of this article and section
two-m of this article, then the company shall pay the tax due
under this section and not the tax due under subdivision (3),
subsection (a), section two-d of this article and section two-m
of this article. If tax liability under this section is less,
then tax shall be paid under subdivision (3), subsection (a),
section two-d of this article and section two-m of this article
and the tax due under this section shall not be paid. The
provisions of this subsection shall expire and become null and
void for taxable years beginning on or after the first day of
January, one thousand nine hundred ninety-eight.
(e)
Effective date. -- The amendments to this section made
in the year one thousand nine hundred ninety shall take effect on
the first day of October, one thousand nine hundred ninety:
Provided, That as to calendar months ending before such date, the
tax rates specified in this section, as then in effect shall be
fully and completely preserved.