Date Requested:March 05, 2009
Time Requested:02:44 PM
Agency: Motor Vehicles, Division of
CBD Number: Version: Bill Number: Resolution Number:
2009R2110 Introduced SB388
CBD Subject: SALES TAX DEDUCTION/EXEMPTION FOR PURCHASING AUTOS
FUND(S)
Road Fund
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 purpose of this bill is to provide a full tax deduction for the purchase of a new automobile in the tax year 2009; providing an exemption from the sales tax for the purchase of a motor vehicle in a thirty day period beginning seven days after passage.
    
     The bill also provides a sales tax holiday for fuel efficient vehicles every year after 2009. The sales tax holiday will occur every year for two weeks in September.
    
     This bill impacts both the collection of sales tax which is designated for the Road Fund and personal income tax which goes to the General Revenue Fund. The Division of Motor Vehicles will address the Road Fund implications and the Department of Tax and Revenue will address the General Revenue Fund in a separate fiscal note.
    
     The Division makes the following assumptions concerning implementation:
    
     1. The thirty day tax free period which is to commence seven days after passage will begin on June 1, 2009 and end on June 30, 2009.
    
     2. The opportunity to purchase a vehicle without payment of tax will increase sales in the period by 50%.
    
     3. The purchase of vehicles is evenly distributed across all classes of vehicles and the fuel efficiencies within those classes.
    
     Projected Loss to the Road Fund in FY 09 - $ 21,268,610
    
     Projected Annual Loss to Road Fund - $ 3,233,781

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
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 -21,268,610 -21,268,610 -3,233,781
3. Explanation of above estimates (including long-range effect):
    Thirty Day Tax Holiday FY09
    
    Average of June collections for FY 07 and FY 08 $ 14,179,073
    Multiplier to project a 50% increase in volume 1.5
    
    Projected Loss to the Road Fund in FY 09 $ 21,268,610
    
    
    Fourteen Day Tax Holiday after 2009
    
    Average of September collections for FY 08 and FY 09 $ 13,859,059
    Taxes attributable to 14 days of a 30 day period $ 6,467,561
    Taxes attributable to top 1/3 of fuel efficiency $ 2,155,854
    Multiplier to project a 50% increase in volume 1.5
    
    Projected Annual Loss to Road Fund $ 3,233,781
    


Memorandum
Person submitting Fiscal Note:
Rick Johnston
Email Address:
Rick.M.Johnston@wv.gov