Date Requested:January 17, 2012
Time Requested:01:28 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1452 Introduced SB217
CBD Subject: MOTOR FUEL TAX
FUND(S)
State Road Fund
Sources of Revenue
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 that if a current federal tax on motor fuels should be eliminated or suspended an additional state tax would be imposed in the same amount. The bill requires proceeds from the state tax to be distributed in the same manner as currently exists.
    
    As written, we are unable to accurately estimate the revenue impact to the State Road Fund associated with the passage of this bill because of lack of knowledge of future federal policies regarding the Federal Highway Trust Fund. Currently, the federal government imposes various taxes on motor fuel (e.g., 18.4 cents per gallon on gasoline) that are dedicated to the Federal Highway Trust Fund. Each state receives a matching portion of the Highway Trust Fund through the Federal Aid-Highway Program. If the federal government suspended or eliminated the taxes on motor fuel, there would be no immediate funding of the Highway Trust Fund unless Congress directed funds from other sources. As a result, each state could lose the matching funds available for highway projects. The passage of this bill may offset some of that loss, but it is unknown as to how or when such action may or may not take place. Since it’s inception in 1932, the federal gasoline tax has never been suspended or eliminated.
    
    Additional administrative costs to the State Tax Department are unknown because of the speculative nature of the bill.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
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):
    The stated purpose of this bill is to provide that if a current federal tax on motor fuels should be eliminated or suspended an additional state tax would be imposed in the same amount. The bill requires proceeds from the state tax to be distributed in the same manner as currently exists.
    
    As written, we are unable to accurately estimate the revenue impact to the State Road Fund associated with the passage of this bill because of lack of knowledge of future federal policies regarding the Federal Highway Trust Fund. Currently, the federal government imposes various taxes on motor fuel (e.g., 18.4 cents per gallon on gasoline) that are dedicated to the Federal Highway Trust Fund. Each state receives a matching portion of the Highway Trust Fund through the Federal Aid-Highway Program. If the federal government suspended or eliminated the taxes on motor fuel, there would be no immediate funding of the Highway Trust Fund unless Congress directed funds from other sources. As a result, each state could lose the matching funds available for highway projects. The passage of this bill may offset some of that loss, but it is unknown as to how or when such action may or may not take place. Since it’s inception in 1932, the federal gasoline tax has never been suspended or eliminated.
    
    Additional administrative costs to the State Tax Department are unknown because of the speculative nature of the bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to provide that if a current federal tax on motor fuels should be eliminated or suspended an additional state tax would be imposed in the same amount. The bill requires proceeds from the state tax to be distributed in the same manner as currently exists.
    
    W.Va. Code §11-14C-5 already imposes a motor fuel excise tax. Even if the State did not already have a motor fuel excise tax, this bill is problematic. The bill does not contain language addressing the status of the state “created” tax in the event the federal excise tax is reinstated. Also, the bill does not address whether or not the current State Motor Fuel Excise tax should be repealed or retained if the federal tax is eliminated, or eliminated and then reinstated.
    
    In addition, the directive that the state tax be created “immediately before the suspension or elimination of the federal excise tax” is problematic. Administering a new “state” tax without sufficient notice would be difficult for the Tax Department and taxpayers.
    
    These problems would also exist even if the stated purpose of the bill was to “increase” the State’s existing Motor Fuel Excise Tax as opposed to “creating” an already existing tax.