Date Requested:March 10, 2009
Time Requested:04:59 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2009R2721 Introduced HB3072
CBD Subject: SALES TAX DEDUCTION/EXEMPTION FOR AUTO PURCHASE
FUND(S)
General Revenue Fund and State Road Fund
Sources of Revenue
General Fund,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 provide a full tax deduction for the purchase of a new automobile in the tax year 2009; and providing an exemption from the sales tax for the purchase of a new vehicle in the tax year 2009.
    
    As written, this bill allows a credit against Personal Income Tax for the full purchase price of a new automobile purchased in this State in 2009. The credit may be carried forward to subsequent tax years until the full credit is used. Based upon an average price of new vehicles of $24,400 and estimated new automobile sales of nearly 85,000, the annual loss to the General Revenue Fund would be about $212 million per year for fiscal years 2010 through 2018. In the final year, FY2019, the annual loss would fall to $160 million. These estimates assume an average tax liability of $2,500 per year. Therefore, it would take nearly 10 years for the full credit to be exhausted. Also, there would be revenue consequences for the State Road Fund from the proposed sales tax holiday in the bill.
    
    Additional administrative costs to the State Tax Department from the passage of this bill would be minimal.
    

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 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 -212,000,000 -212,000,000
3. Explanation of above estimates (including long-range effect):
    The stated 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 new vehicle in the tax year 2009; and providing a sales tax holiday for fuel efficient vehicles every year after 2009.
    
    As written, this bill allows a credit against Personal Income Tax for the full purchase price of a new automobile purchased in this State in 2009. The credit may be carried forward to subsequent tax years until the full credit is used. Based upon an average price of new vehicles of $24,400 and estimated new automobile sales of nearly 85,000 (total tax credits of roughly $2 billion), the annual loss to the General Revenue Fund would be about $212 million per year for fiscal years 2010 through 2018. In the final year, FY2019, the annual loss would fall to $160 million. These estimates assume an average tax liability of $2,500 per year. Therefore, it would take nearly 10 years for the full credit to be exhausted. Also, there would be revenue consequences for the State Road Fund from the proposed sales tax holiday in the bill.
    
    Additional administrative costs to the State Tax Department from the passage of this bill would be minimal.
    


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