FISCAL NOTE
FUND(S):
7351
Sources of Revenue:
General Fund
Legislation creates:
A New Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The bill imposes a $.05 per ounce tax on liquor sales by the Commissioner at uniform prices in state stores and deposits an unspecified amount that this tax would generate into the WV Addictions Treatment & Recovery Fund.
The WVABCA does not operate state stores or sell liquor at retail.
No more than 3% of the unspecified revenue generated from the tax would be for administrative costs.
Based on estimated case sizes and annual case sales for 2010 and the ounces of the bottle sizes in the estimated cases, the tax if drafted correctly may generate $14,599,128 in revenue but perhaps at the cost of decreasing overall sales.
Depending on the ounces in the bottle and the number of bottles in a case this bill could have a negative impact on overall revenue. For example a 750 ml (25.4 ounces) bottle in a 12 bottle case would be taxes of $1.27 a bottle or $15.24 per case. Thus increased taxes could results in decreased sales which would decrease consumption and the revenue effect of the tax.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2011
Increase/Decrease
(use"-") |
2012
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 |
7,299,564 |
14,599,128 |
14,599,128 |
Explanation of above estimates (including long-range effect):
Assumptions were made as to case sizes (1, 3, 6 or 12 bottle cases) and the data per bottle size and ounces were calculated based on past revenue history.
Generally, taxes have a negative impact on overall revenue and therefore the net effect of the tax could be negative as overall revenue is negatively impact and the additional revenue from the tax is lessened as well.
Memorandum
The bill imposes a $.05 per ounce tax on liquor sales by the Commissioner at uniform prices in state stores and deposits an unspecified amount that this tax would generate into the WV Addictions Treatment & Recovery Fund.
The funds are to be used for community based support and correctional programs related to addictions from drug and alcohol abuse.
No more than 3% of the unspecified revenue generated from the tax would be for administrative costs.
The 1st problem is that the Commissioner does not set retail prices and the prices are not uniform.
Secondly, the State does not operate state stores. Retail prices are set at a minimum of 110% of the retail cost to retail licensee. Retailers may charge more than the 110% markup but not less than that amount.
Third, this bill, as written, is flawed and places a per ounce tax on a product that is not priced per ounce.
Lastly, the bill, as written, does not accomplish its objective of adding an amount to the pricing of liquor for the benefit of its new fund since the Commissioner does not set retail prices and does not operate state stores.
Person submitting Fiscal Note: Anoop Bhasin, WVABCA General Counsel
Email Address: Anoop.K.Bhasin@wv.gov