Date Requested:February 22, 2005
Time Requested:04:48 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R36 Intro HB2540
CBD Subject: High Tech Tax Credits
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

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

    The stated purpose of this bill is to provide for a tax credit for new high technology products and manufacturing.
    
    The implementation of this bill could result in a potential revenue decrease to State government. If the bill applies to only software developers and manufacturers of computer equipment, the revenue consequences would be minimal. However, if the credit is held to apply to all manufacturers who make normal upgrades to their production line or support equipment, then the annual revenue decrease could be more significant.
    
    There would be a one-time minimal administrative cost for forms and instructions to the Tax Department. There would be no other administrative costs to the Tax Department.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 5,000 0
Personal Services 0 0 0
Current Expenses 0 5,000 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would provide a tax credit of $250 for each new job at a new high technology manufacturing facility or at a new high technology product line of an existing manufacturing facility.
    
    The implementation of this bill could result in a potential revenue decrease to State government. If the bill applies to only software developers and manufacturers of computer equipment, the revenue consequences would be minimal. However, if the credit is held to apply to all manufacturers who make normal upgrades to their production line or support equipment, then the annual revenue decrease could be more significant.
    
    The State Tax Department would incur $5,000 in additional costs for printing promotional information to notify taxpayers of the availability of the credit and for printing forms.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to provide for a tax credit for new high technology products and manufacturing.
    
    The bill extends the credit only to “a new high technology manufacturing facility” or “a new high technology product line of an existing manufacturing facility.” However, the bill never defines the term “high technology,” except to say under the definition of manufacturing that, “manufacturing includes the production or use of advanced or sophisticated devices in the fields of electronics and computers.” In addition, the term “high technology products” is used but not defined. The scope of these terms affects the availability of the credit and its revenue impact.
    
    Although the Article heading indicates that the credit would be available after July 1, 1999 and the Legislative purpose is to encourage capital investment through the manufacture of high technology products after June 30, 2001, internal dates limit the credit to tax years beginning on or after July 1, 2005.
    
    Also, the bill proposes to create a new article. However, the proposed new article would replace an article enacted during the 2005 Special Session.