FISCAL NOTE
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.
As stated, the passage of this bill would eliminate the Consumers Sales Tax on food sold for human consumption off the premises where sold by a three-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of possible revenue loss to the General Revenue Fund. Fiscal Year 2007 represents the first full year of removal of the Consumers Sales Tax on food sold at grocery stores.
Sales of Food
Meant for Home
Consumption Only
FY2004 -$19.2 million
FY2005 -$65.2 million
FY2006 -$111.2 million
FY2007 -$138.0 million
Additional administrative costs to the Tax Department would be about $23,300 per year until the tax is eliminated due to notifying taxpayers of the rate changes. Thereafter, there would be no additional administrative costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2003
Increase/Decrease
(use"-") |
2004
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
23,300 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
23,300 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-19,200,000 |
-138,000,000 |
Explanation of above estimates (including long-range effect):
As stated, the passage of this bill would eliminate the Consumers Sales Tax on food sold for human consumption off the premises where sold by a three-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of possible revenue loss to the General Revenue Fund. Fiscal Year 2007 represents the first full year of removal of the Consumers Sales Tax on food sold at grocery stores.
Sales of Food
Meant for Home
Consumption Only
FY2004 -$19.2 million
FY2005 -$65.2 million
FY2006 -$111.2 million
FY2007 -$138.0 million
Additional administrative costs to the Tax Department would be about $23,300 per year until the tax is eliminated due to notifying taxpayers of the rate changes. Thereafter, there would be no additional administrative costs.
Memorandum
The stated purpose of this bill is to establish the Food Tax Relief Act and to eliminate by a three-year phase-out the consumer sales tax on food and food products sold for human consumption off the premises where sold.
The bill does not specifically define food or “food products,” nor does it provide guidance for the requirement that the food be sold for consumption off the premises where sold.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us