FISCAL NOTE
FUND(S):
General Revenue Fund, Department of Agriculture's Crop Transition Programs
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 increase from fifty-five cents to one dollar and fifty-five cents the rate of the tax on cigarettes. This bill also dedicates the first five million dollars to the Department of Agriculture crop transition programs.
As written, this bill would increase the tax rate on cigarettes from the current 55 cents per pack of twenty to $1.55 per pack. As a result, the net gain to the General Revenue Fund would be about $110 million per year. This estimate includes a slight decline in consumption due to higher prices at the retail level. Also, the bill dedicates the first $5 million in Cigarette Tax revenue during the first year of effect to the Department of Agriculture for crop transition programs.
Additional administrative costs to the State Tax Department would be minimal in the current fiscal year due to notifying taxpayers of the rate change. Thereafter, there would be no additional administrative costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2007
Increase/Decrease
(use"-") |
2008
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
105,000,000 |
110,000,000 |
Explanation of above estimates (including long-range effect):
The stated purpose of this bill is to increase from fifty-five cents to one dollar and fifty-five cents the rate of the tax on cigarettes. This bill also dedicates the first five million dollars to the Department of Agriculture crop transition programs.
As written, this bill would increase the tax rate on cigarettes from the current 55 cents per pack of twenty to $1.55 per pack. As a result, the net gain to the General Revenue Fund would be about $110 million per year. This estimate includes a slight decline in consumption due to higher prices at the retail level. Also, the bill dedicates the first $5 million in Cigarette Tax revenue during the first year of effect to the Department of Agriculture for crop transition programs.
Additional administrative costs to the State Tax Department would be minimal in the current fiscal year due to notifying taxpayers of the rate change. Thereafter, there would be no additional administrative costs.
Memorandum
The stated purpose of this bill is to increase from fifty-five cents to one dollar and fifty-five cents the rate of the tax on cigarettes. This bill also dedicates the first five million dollars to the Department of Agriculture crop transition programs.
Although this bill increases the tax rate on cigarettes, it does nothing to the tax on tobacco products other than cigarettes. However, the $5 million dedication is placed in the subsection that imposes a tax on other tobacco products. Since the tax rate on cigarettes is different than the tax rate on other tobacco products, this may create some confusion.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us