Date Requested:February 23, 2005
Time Requested:02:46 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R493 Intro SB260
CBD Subject: WV Competitive Tax Relief
FUND(S)
General Revenue Fund & State Road Fund
Sources of Revenue
General Fund,Other Fund State Road Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

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

    The stated purpose of this bill is to establish the Make West Virginia Competitive Tax Relief Act and to eliminate, by a six-year phase-out, the consumer sales tax on food and food products sold for human consumption off the premises where sold and reduce the tax on gasoline by four cents a gallon in 2006, one year before it is scheduled under current law to be reduced to 15 and ½ cents per gallon. Currently, the applicable tax is 20 and ½ cents per gallon.
    
    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 six-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of revenue loss to the General Revenue Fund. Fiscal Year 2012 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
    
    FY2006 -$10.6 million
    
    FY2007 -$35.9 million
    
    FY2008 -$61.2 million
    
    FY2009 -$86.6 million
    
    FY2010 -$111.9 million
    
    FY2011 -$137.2 million
    
    FY2012 -$152.0 million
    
    
    Also, the bill reduces the flat rate portion of the Motor Fuel Excise Tax by one cent per gallon to 19.5 cents, from the current rate of 20.5 cents per gallon on August 1, 2006. The rate is reduced further by 4 cents per gallon to 15.5 cents on August 1, 2007. The following table provides estimates of revenue loss to the State Road Fund. Fiscal Year 2009 represents the first full year of effect from lowering the tax rate to 15.5 cents per gallon
    
    Gasoline and Special Fuel Excise Tax
    
    FY2007 -$9.9 million
    
    FY2008 -$51.4 million
    
    FY2009 -$59.3 million
    
    
    Additional administrative costs to the Tax Department would total about $26,000 during the current fiscal year due to notifying taxpayers of the rate changes for both taxes. Until the Consumers Sales Tax on food is completely eliminated, administrative costs would be approximately $24,000 per year. Thereafter, there would be no additional administrative costs.

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 25,525 23,925 0
Personal Services 0 0 0
Current Expenses 25,525 23,925 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):
    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 six-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of revenue loss to the General Revenue Fund. Fiscal Year 2012 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
    
    FY2006 -$10.6 million
    
    FY2007 -$35.9 million
    
    FY2008 -$61.2 million
    
    FY2009 -$86.6 million
    
    FY2010 -$111.9 million
    
    FY2011 -$137.2 million
    
    FY2012 -$152.0 million
    
    
    Also, the bill reduces the flat rate portion of the Motor Fuel Excise Tax by one cent per gallon to 19.5 cents, from the current rate of 20.5 cents per gallon on August 1, 2006. The rate is reduced further by 4 cents per gallon to 15.5 cents on August 1, 2007. The following table provides estimates of revenue loss to the State Road Fund. Fiscal Year 2009 represents the first full year of effect from lowering the tax rate to 15.5 cents per gallon
    
    Gasoline and Special Fuel Excise Tax
    
    FY2007 -$9.9 million
    
    FY2008 -$51.4 million
    
    FY2009 -$59.3 million
    
    
    Additional administrative costs to the Tax Department would total $25,525 during the current fiscal year due to notifying taxpayers of the rate changes for both taxes. Until the Consumers Sales Tax on food is completely eliminated, administrative costs would be $23,925 per year. Thereafter, there would be no additional administrative costs.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to establish the Make West Virginia Competitive Tax Relief Act and to eliminate, by a six-year phase-out, the consumer sales tax on food and food products sold for human consumption off the premises where sold and reduce the tax on gasoline by four cents a gallon in 2006, one year before it is scheduled under current law to be reduced to 15 and ½ cents per gallon. Currently, the applicable tax is 20 and ½ cents per gallon.
    
    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.