Date Requested:February 24, 2005
Time Requested:03:38 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R516 Intro HB2646
CBD Subject: Business Franchise Abolished
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.

    The stated purpose of this bill is to phase out and abolish the business franchise tax on and after July 1, 2006.
    
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below. Although the tax is abolished for tax years beginning on or after July 1, 2006, current collection patterns indicate some residual collections would occur up to three years later.
    
     General Revenue Fund
    
    FY2006 ($18.0 million)
    
    FY2007 ($67.0 million)
    
    FY2008 ($108.0 million)
    
    FY2009 ($121.0 million)
    
    FY2010+ ($126.0+ million)
    
    Additional administrative costs to the Tax Department associated with this bill would be roughly $34,000 in the current fiscal year and about $24,000 next fiscal year due to notifying taxpayers of the changes and programming 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 34,000 22,000 0
Personal Services 0 0 0
Current Expenses 23,000 23,000 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 11,000 1,000 0
2. Estimated Total Revenues 0 -18,000,000 -18,000,000
3. Explanation of above estimates (including long-range effect):
    According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below. Although the tax is abolished for tax years beginning on or after July 1, 2006, current collection patterns indicate some residual collections would occur up to three years later.
    
     General Revenue Fund
    
    FY2006 ($18.0 million)
    
    FY2007 ($67.0 million)
    
    FY2008 ($108.0 million)
    
    FY2009 ($121.0 million)
    
    FY2010+ ($126.0+ million)
    
    Additional administrative costs to the Tax Department associated with this bill would be roughly $34,000 in the current fiscal year and about $24,000 next fiscal year due to notifying taxpayers of the changes and programming costs.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us