Date Requested:March 07, 2005
Time Requested:01:18 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1431 Intro HB2917
CBD Subject: Phase Out Business Franchise Tax
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, 2007.
    
    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, 2007, current collection patterns indicate some residual collections would occur up to three years later.
    
    FY2007 ($18.0 million)
    
    FY2008 ($68.0 million)
    
    FY2009 ($112.0 million)
    
    FY2010 ($125.0 million)
    
    FY2011+ ($130.0+ million)
    
    Additional administrative costs to the Tax Department associated with this bill would be roughly $34,000 in fiscal year 2006 and about $24,000 in the following fiscal year.
    

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 34,000 24,000
Personal Services 0 0 0
Current Expenses 0 23,000 23,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 11,000 1,000
2. Estimated Total Revenues 0 0 -130,000,000
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, 2007, current collection patterns indicate some residual collections would occur up to three years later.
    
    FY2007 ($18.0 million)
    
    FY2008 ($68.0 million)
    
    FY2009 ($112.0 million)
    
    FY2010 ($125.0 million)
    
    FY2011+ ($130.0+ million)
    
    Additional administrative costs to the Tax Department associated with this bill would be roughly $34,000 in fiscal year 2006 and about $24,000 in the following fiscal year.


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