Sources of Revenue:

Special 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 the tax on purchases of intoxicating liquors outside corporate limits of municipalities from five percent to six percent, with the increase being deposited into the Regional Jail Operations Partial Reimbursement Fund for distribution to counties. According to our interpretation and assuming little or no change in taxpayer behavior resulting from the tax rate increase, the change in the tax rate would increase revenue from the tax on purchases of intoxicating liquors outside municipal corporate limits by roughly $160,000 per year. The additional revenue would be deposited into the Regional Jail Operations Partial Reimbursement Fund. Since the bill does not make a similar tax rate change applicable to the purchases of intoxicating liquors within municipal corporate limits (or within one mile of the corporate limits) as levied by W. Va. Code §60-3A-21, a change in taxpayer behavior may reduce the potential revenue increase. Additional administrative costs to the State Tax Department associated with this bill would be minimal.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2008 Increase/Decrease (use"-")	2009 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	160,000	160,000

Explanation of above estimates (including long-range effect):

Passage of this bill would increase the tax on purchases of intoxicating liquors outside corporate limits of municipalities from five percent to six percent, with the increase being deposited into the Regional Jail Operations Partial Reimbursement Fund for distribution to counties. According to our interpretation and assuming little or no change in taxpayer behavior resulting from the tax rate increase, the change in the tax rate would increase revenue from the tax on purchases of intoxicating liquors outside municipal corporate limits by roughly $160,000 per year. The additional revenue would be deposited into the Regional Jail Operations Partial Reimbursement Fund. Since the bill does not make a similar tax rate change applicable to the purchases of intoxicating liquors within municipal corporate limits (or within one mile of the corporate limits) as levied by W. Va. Code §60-3A-21, a change in taxpayer behavior may reduce the potential revenue increase. Additional administrative costs to the State Tax Department associated with this bill would be minimal.

Memorandum

The stated purpose of this bill is to increase the tax on purchases of intoxicating liquors outside corporate limits of municipalities from five percent to six percent, with the increase being deposited into the Regional Jail Operations Partial Reimbursement Fund for distribution to counties. As written, this proposal would increase the tax increase the tax on purchases of intoxicating liquors outside corporate limits of municipalities without making a corresponding rate change in the tax on purchases of intoxicating liquors within (or within one mile of) corporate limits of municipalities. The disparate rates may result in a change in taxpayer behavior that may reduce the potential revenue impact. Additionally, the proposed amendment may require a commensurate amendment to W. Va. Code §31-20-10b, in order to allow the Regional Jail Operations Partial Reimbursement Fund to accept deposits from the tax on purchases of intoxicating liquors outside corporate limits of municipalities.

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