Date Requested:March 04, 2005
Time Requested:01:51 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2004R1096 Intro HB2864
CBD Subject: Exemption Each Quarter
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 establish a Qualified Uniform Exemption from Sales Tax (QUEST) program by providing for a sales tax holiday one weekend each quarter for certain items sold during the weekend which are subject to sales tax.
    
    According to our interpretation, sales of all clothing, computers and computer related equipment or software, school supplies, tires, automotive repairs, home heating and cooling equipment, home weatherization supplies and selected food products would be exempt from the Consumers Sales Tax the first weekend of February, May, August and November. The Tax Department does not have access to the data necessary to calculate the revenue impact for the proposed quarterly exemption of the enumerated items. However, the reduction in General Revenue Fund Tax collections could be significant.
    
    The provisions of this bill would impose additional compliance costs upon vendors. The additional vendor costs would possibly be passed on to the consumer in the form of higher prices.
    
    Additional administrative costs for the Tax Department would be roughly $24,000 in the first year of the program.

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 24,000 0
Personal Services 0 0 0
Current Expenses 0 24,000 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):
    This bill provides that sales of all clothing, computers and computer related equipment or software, school supplies, tires, automotive repairs, home heating and cooling equipment, home weatherization supplies and selected food products would be exempt from the Consumers Sales Tax the first weekend of February, May, August and November. The Tax Department does not have access to the data necessary to calculate the revenue impact for the proposed quarterly exemption of the enumerated items. However, the reduction in General Revenue Fund Tax collections could be significant. Additionally, the provisions of this bill would impose additional compliance costs upon vendors. The additional vendor costs would possibly be passed on to the consumer in the form of higher prices.
    
    Additional administrative costs for the Tax Department would be roughly $24,000 in the first year of the program.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to establish a Qualified Uniform Exemption from Sales Tax (QUEST) program by providing for a sales tax holiday one weekend each quarter for certain items sold during the weekend which are subject to sales tax.
    
    As written, the bill specifically excludes “preprepared food products”, but does not provide a definition of this term. Also, in reference to qualified items, the bill states “which are subject to the tax imposed by this article, are exempted from the taxes if the sales ...”. (Emphasis added). The emphasized phrase “the taxes” may not be sufficiently unambiguous. The bill also references “eastern daylight time.” Two of the periods, February and November, referenced in the bill do not use “eastern daylight time.”