Date Requested:February 06, 2012
Time Requested:02:37 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1986 Introduced SB514
CBD Subject: ROLL YOUR OWN CIGARETTE
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 provide that any person who maintains a “roll your own” cigarette machine at a retail establishment is deemed a manufacturer of cigarettes and that the resulting product is deemed to be “cigarettes sold to a consumer” which would require payment of excise tax on the cigarettes.
    
    This bill would deem retail establishments that offer “roll your own” cigarette machines to be a manufacturer of cigarettes and therefore subject to the excise tax on those cigarettes. According to our interpretation, the passage of this bill may result in additional State General Revenue Fund collections of between $500,000 and $750,000 per year. The estimates are based upon “roll your own” cigarette machines representing less than 2 percent of total cigarette sales.
    
    There would be no additional administrative costs to the State Tax Department from the passage of this 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 any person who maintains a “roll your own” cigarette machine at a retail establishment is deemed a manufacturer of cigarettes and that the resulting product is deemed to be “cigarettes sold to a consumer” which would require payment of excise tax on the cigarettes.
    
    This bill would deem retail establishments that offer “roll your own” cigarette machines to be a manufacturer of cigarettes and therefore subject to the excise tax on those cigarettes. According to our interpretation, the passage of this bill may result in additional State General Revenue Fund collections of between $500,000 and $750,000 per year. The estimates are based upon “roll your own” cigarette machines representing less than 2 percent of total cigarette sales.
    
    Absent this legislation and if the machines become more prevalent, the tax differential between $0.55 per pack for cigarettes and 7 percent of the wholesale price for loose tobacco used in the cigarettes will result in lower collections. If the use of “roll your own” cigarette machines grows to represent roughly 10 percent of the market, tax collections could be reduced by roughly $4.6 million per year.
    
    There would be no additional administrative costs to the State Tax Department from the passage of this 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 any person who maintains a “roll your own” cigarette machine at a retail establishment is deemed a manufacturer of cigarettes and that the resulting product is deemed to be “cigarettes sold to a consumer” which would require payment of excise tax on the cigarettes.
    
    There appears to be a defect in the bill title. The reference to the chapter that includes the article being amended refers to “sold to a consumer for purposes of this article nine-d,” instead of “sold to a consumer for purposes of article nine-d, chapter sixteen”.