FISCAL NOTE
FUND(S):
State Road Fund
Sources of Revenue:
Other Fund State Road 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 establish a flat-rate excise tax on motor fuels at $.205 and increase the variable component to 6% of the average wholesale price.
The passage of this bill would keep the current flat rate component of the Motor Fuel Excise Tax at 20.5 cents per gallon. Otherwise, the scheduled tax rate decrease would result in a loss of roughly $45 million in FY2008 and $55 million thereafter.
Also, this bill increases the variable rate component from 5 percent to 6 percent of the average wholesale price of motor fuel. Currently, the average wholesale price of fuel is $2.20 per gallon, resulting in a tax of 11 cents per gallon. At 6 percent, the tax would be 13.2 cents per gallon. The tax increase of 2.2 cents would result in a gain of $28.2 million in FY2008. If the price of fuel remains the same, the gain in FY2009 would be $30.8 million. Thereafter, any revenue gain or loss would be dependent on the average wholesale price of fuel.
Additional administrative costs to the State Tax Department would be minimal.
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 |
2,873 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
2,873 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The stated purpose of this bill is to establish a flat-rate excise tax on motor fuels at $.205 and increase the variable component to 6% of the average wholesale price.
The passage of this bill would keep the current flat rate component of the Motor Fuel Excise Tax at 20.5 cents per gallon. Otherwise, the scheduled tax rate decrease would result in a loss of roughly $45 million in FY2008 and $55 million thereafter.
Also, this bill increases the variable rate component from 5 percent to 6 percent of the average wholesale price of motor fuel. Currently, the average wholesale price of fuel is $2.20 per gallon, resulting in a tax of 11 cents per gallon. At 6 percent, the tax would be 13.2 cents per gallon. The tax increase of 2.2 cents would result in a gain of $28.2 million in FY2008. If the price of fuel remains the same, the gain in FY2009 would be $30.8 million. Thereafter, any revenue gain or loss would be dependent on the average wholesale price of fuel.
Additional administrative costs to the State Tax Department would be minimal.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us