FISCAL NOTE
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 create an annual exemption for clothing, footwear and school supplies.
According to our interpretation, passage of this bill would create a three-day annual sales tax holiday and would reduce General Revenue Fund Tax collections by approximately $1.9 million per year. As written, the bill would apply to clothing items and school supplies under $100, not just back-to-school clothing items and supplies under $100. Additionally, computers or computer accessories, where the cost after credit for any manufacturer’s rebate is less than $750, would be exempt.
Additional administrative costs to the State Tax Department would be $41,500 during the current fiscal year due to notifying taxpayers and vendors of the annual holiday. Thereafter, there would be no additional costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2012
Increase/Decrease
(use"-") |
2013
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
41,500 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
41,500 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-1,900,000 |
Explanation of above estimates (including long-range effect):
The stated purpose of this bill is to create an annual exemption for clothing, footwear and school supplies.
According to our interpretation, passage of this bill would create a three-day annual sales tax holiday and would reduce General Revenue Fund Tax collections by approximately $1.9 million per year. As written, the bill would apply to clothing items and school supplies under $100, not just back-to-school clothing items and supplies under $100. Additionally, computers or computer accessories, where the cost after credit for any manufacturer’s rebate is less than $750, would be exempt.
Additional administrative costs to the State Tax Department would be $41,500 during the current fiscal year due to notifying taxpayers and vendors of the annual holiday. Thereafter, there would be no additional costs.
Memorandum
The stated purpose of this bill is to create an annual exemption for clothing, footwear and school supplies.
This bill may be in violation of the Streamlined Sales and Use Tax Agreement (SSUTA). Under the Agreement, items exempted must be defined in Part II or Part III(B) of the Library of Definitions. Footwear is not defined in either of these two parts. Also, SSUTA requires that sales tax holidays be preceded by notice of at least 60 days in advance of the holiday. Since there is no effective date in the bill, the notice time line may be difficult to fulfill by the first weekend in August 2012.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov