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 purpose of this bill is to abolish the privilege tax and impose a five percent tax on the sale and use of motor vehicles.
As written, the passage of this bill could result in a loss to the State Road Fund of approximately $4.8 million in FY2008 because of the “new resident” exemption. However, some of this loss maybe offset by increased compliance in vehicle registrations. Also, increased vehicle registration compliance will result in a modest increase in Personal Property tax revenue, with local governments the primary beneficiary.
Under the provisions of this bill, the 5 percent Motor Vehicle Privilege Tax will be replaced by a 5 percent Consumers Sales and Use Tax on July 1, 2008. The placement of collection responsibility at the point of sale on the vendor and the subjection of the tax to the Procedures Act will promote greater taxpayer compliance and should result in a modest revenue increase in the long-term.
There would be no additional administrative costs to the State Tax Department from the passage of this bill. As written, the administration of this bill falls under the Division of Motor Vehicles. Also, there would be no additional administrative costs to county assessors.
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 |
-4,800,000 |
-4,800,000 |
Explanation of above estimates (including long-range effect):
As written, the passage of this bill could result in a loss to the State Road Fund of approximately $4.8 million in FY2008 because of the “new resident” exemption. However, some of this loss maybe offset by increased compliance in vehicle registrations. Also, increased vehicle registration compliance will result in a modest increase in Personal Property tax revenue, with local governments the primary beneficiary.
Under the provisions of this bill, the 5 percent Motor Vehicle Privilege Tax will be replaced by a 5 percent Consumers Sales and Use Tax on July 1, 2008. The placement of collection responsibility at the point of sale on the vendor and the subjection of the tax to the Procedures Act will promote greater taxpayer compliance and should result in a modest revenue increase in the long-term.
There would be no additional administrative costs to the State Tax Department from the passage of this bill. As written, the administration of this bill falls under the Division of Motor Vehicles. Also, there would be no additional administrative costs to county assessors.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us