Date Requested:January 27, 2011
Time Requested:05:47 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2180 Introduced SB305
CBD Subject: LOCAL GOV'T SALES TAX
FUND(S)
Local Government Funds
Sources of Revenue
Other Fund local government funds
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 authorize county and municipal government to levy a tax on food and beverages. It provides for county and municipal option elections relating to the tax. It also designates the usage of some funds collected by the tax.
    
    As written, this bill would authorize a tax on food and beverages sold for human consumption by a restaurant, where the tax rate would be 3 percent, if levied by a county, and 2 percent if levied by a municipality. The bill also provides that the tax is applicable to any restaurant whose food and beverage service is regulated by county boards of health and for the collection and use of revenue from a county levied tax.
    
    The State Tax Department does not possess sufficient information to determine how many counties or municipalities would levy the proposed tax.
    
    Passage of this bill would result in no additional administrative costs for the State Tax Department since collection of the tax would be the responsibility of the levying authority. Any county or municipality levying the proposed tax would incur 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 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 0 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill would authorize a tax on food and beverages sold for human consumption by a restaurant, where the tax rate would be 3 percent, if levied by a county, and 2 percent if levied by a municipality. The bill also provides that the tax is applicable to any restaurant whose food and beverage service is regulated by county boards of health and for the collection and use of revenue from a county levied tax.
    
    The State Tax Department does not possess sufficient information to determine how many counties or municipalities would levy the proposed tax.
    
    Passage of this bill would result in no additional administrative costs for the State Tax Department since collection of the tax would be the responsibility of the levying authority. Any county or municipality levying the proposed tax would incur 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 authorize county and municipal government to levy a tax on food and beverages. It provides for county and municipal option elections relating to the tax. It also designates the usage of some funds collected by the tax.
    
    Although the bill refers to a “Local Option Food and Beverage Tax,” the imposition of the tax would generally be classified as a sales and use tax. As a sales and use tax, the proposal would appear to be in conflict with other statutes. Via W. Va. Code §11-15B et seq., West Virginia is a member of the Streamlined Sales Tax Project and has adopted the Streamlined Sales Tax Agreement which provides that local tax rates are to be the same. The provision of a 3 percent rate for a county tax and a 2 percent rate for a municipal tax would appear to be in violation of the Streamlined Sales Tax Agreement. Additionally, W. Va. Code §8-13C-4 precludes municipalities with a Business and Occupation Tax from levying a sales tax, and the statute requires that proceeds from a sales tax must be applied to pension relief.
    
    Additionally, the bill does not define food and proposes exemption not in the sales and use tax statute. The definition of food for the proposed tax and the exemptions should be consistent with provisions of the Streamlined Sales Tax Agreement and the sales and use tax statute.
    
    While the bill addresses the collection and use of a county tax, there are no provisions regarding the collection of a municipal tax.