FISCAL NOTE
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 exempt the sale of food not consumed on the premises from the consumers sales tax.
The passage of this bill would result in a loss to the General Revenue Fund of about $100 million in FY2008 and $75 million in FY2009, and thereafter. These estimates assume that the exemption would apply to sales, purchases, and uses of food and food ingredients intended for human consumption that is currently taxed at a reduced sales and use tax rate of 5 percent and is set to be reduced further to 4 percent on July 1, 2007 and to 3 percent on July 1, 2008. The estimates include food items sold by grocery stores, supermarkets, and similar type businesses.
Additional administrative costs to the State Tax Department would be minimal during the current fiscal year due to notifying taxpayers of the exemption. Thereafter, there would be no additional administrative costs to the Department.
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 |
4,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
4,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-100,000,000 |
-75,000,000 |
Explanation of above estimates (including long-range effect):
The stated purpose of this bill is to exempt the sale of food not consumed on the premises from the consumers sales tax.
The passage of this bill would result in a loss to the General Revenue Fund of about $100 million in FY2008 and $75 million in FY2009, and thereafter. These estimates assume that the exemption would apply to sales, purchases, and uses of food and food ingredients intended for human consumption that is currently taxed at a reduced sales and use tax rate of 5 percent and is set to be reduced further to 4 percent on July 1, 2007 and to 3 percent on July 1, 2008. The estimates include food items sold by grocery stores, supermarkets, and similar type businesses.
Additional administrative costs to the State Tax Department would be minimal during the current fiscal year due to notifying taxpayers of the exemption. Thereafter, there would be no additional administrative costs to the Department.
Memorandum
The stated purpose of this bill is to exempt the sale of food not consumed on the premises from the consumers sales tax.
The proposed language is in conflict with WV Code §11-15-3a(c), which calls for prepared food to continue to be taxed at the general 6 percent rate. Also, there is no definition of “food” in the bill. Under the Streamlined Sales Tax Agreement, §11-15B-23(a) requires the exemption to use the terminology for the definition of “food and food ingredients” provided in §11-15B-2. As a result, there maybe a conflict between “food not consumed on the premises” and “food and food products sold for human consumption.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us