Date Requested:January 13, 2011
Time Requested:06:37 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1764 Introduced HB2136
CBD Subject: PLASTIC SHOPPING BAG EXCISE TAX ACT
FUND(S)
General Revenue Fund
Sources of Revenue
General 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 impose an excise tax on grocery stores, drug stores and convenience stores equal to $.05 for each plastic shopping bag given to customers. The tax may not be passed on to customers.
    
    As written, this bill creates a new excise tax to be imposed upon grocery stores, drug stores and convenience stores at a rate of five cents for each plastic shopping bag provided to customers. Assuming that nearly all plastic bags purchased by businesses subject to the proposed tax are provided to customers at no cost, passage of this bill could result in additional revenue of about $23 million per year for the State. This bill does not create a new fund, or designate where the additional revenue is to be deposited. Therefore, it is assumed that these funds would be deposited in the State General Revenue Fund.
    
    Additional administrative costs to the State Tax Department would be $278,900 in the current fiscal year due to programming costs of the new tax and new returns to be printed and mailed. Thereafter, there would be no additional administrative costs.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 278,900 0 0
Personal Services 0 0 0
Current Expenses 48,500 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 230,400 0 0
2. Estimated Total Revenues 0 0 -23,000,000
3. Explanation of above estimates (including long-range effect):
    As written, this bill creates a new excise tax to be imposed upon grocery stores, drug stores and convenience stores at a rate of five cents for each plastic shopping bag provided to customers. Assuming that nearly all plastic bags purchased by businesses subject to the proposed tax are provided to customers at no cost, passage of this bill could result in additional revenue of about $23 million per year for the State. This bill does not create a new fund, or designate where the additional revenue is to be deposited. Therefore, it is assumed that these funds would be deposited in the State General Revenue Fund.
    
    Additional administrative costs to the State Tax Department would be $278,900 in the current fiscal year due to programming costs of the new tax and new returns to be printed and mailed. Thereafter, there would be no additional administrative costs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to impose an excise tax on grocery stores, drug stores and convenience stores equal to five cents for each plastic shopping bag given to customers. The tax may not be passed on to customers.
    
    This bill creates a new article in Chapter 11 titled the Plastic Shopping Bag Excise Tax. It proposes to place upon all “grocery stores, drug stores and convenience stores” subject to the consumers sales and service tax an excise tax of five cents for each plastic shopping bag provided to customers. However, this tax creates a number of problems.
    
    First, calculating the actual number of shopping bags provided to customers may be very cumbersome. The bill only provides that plastic shopping bags actually provided are subject to the tax. Therefore, any bags not provided would be exempt from this tax. It may be contrary to the statute to impose the tax upon the purchase of the bags by the store because a number of those bags would be exempt.
    
    Second, there is no definition of “grocery stores, drug stores and convenience stores”. These terms would require a definition, as they are somewhat vague. While the bill would allow the Tax Commissioner to promulgate rules, there is no requirement and no guidance on this issue.
    
    Third, the West Virginia Constitution provides for “equal and uniform” taxation, but this statute would place the excise tax on only “grocery stores, drug stores and convenience stores” that provide plastic shopping bags to its customers, exempting all other retailers from this tax.