Date Requested:March 14, 2005
Time Requested:01:12 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1571 Intro HB3017
CBD Subject: Clothing Exemption
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 create an exemption for purchases of back-to-school clothing and school supplies by consumers during three-day period in August, two thousand five.
    
    According to our interpretation, passage of this bill would reduce General Revenue Fund Tax collections by approximately $2.2 million in Fiscal Year 2006.
    
    As written, the bill would apply to clothing items priced under $100, not just back-to-school clothing items priced under $100. Additionally, computers or computer accessories, when the cost after credit for any manufacturer’s rebate is less than $750, would be exempt.
    
    Passage of this bill would result in at least $24,000 in additional 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 24,000 0 0
Personal Services 0 0 0
Current Expenses 24,000 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -2,200,000 0
3. Explanation of above estimates (including long-range effect):
    This bill would establish a one week-end exemption for sales of clothing and school supplies priced under $100 during August 2005. Additionally, computers or computer accessories, when the cost after credit for any manufacturer’s rebate is less than $750, would be exempt. The proposed change would benefit both resident shoppers and tourists. In addition, this change would result in increased sales tax compliance costs for retailers. Retailers will generally pass these higher costs on to the consumers.
    
    The Tax Department would incur at least $24,000 in additional administrative costs due to passage of this bill. The additional cost would be printing and postage to notify retailers of the exemption.
    


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