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 reduce the tax on motor fuel.
    
    According to our interpretation, the passage of this bill would reduce the flat rate component of the Motor Fuel Excise Tax from the current rate of 20.5 cents per gallon to 15 cents per gallon. While the bill drafter possibly also sought to delete the variable rate component of the Motor Fuel Excise Tax (i.e., 5% of the average wholesale price of fuel), it is our interpretation that the variable rate component would remain intact because of other sections of the West Virginia Code related to the imposition of such tax. As of January 1, 2012, the variable rate portion of the Motor Fuel Excise Tax is 12.9 cents per gallon. The reduction in the flat rate component of the tax would result in a loss to the State Road Fund of nearly $60 million per year.
    
    Additional administrative costs to the State Tax Department would be minimal.



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 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 -60,000,000


Explanation of above estimates (including long-range effect):


    The stated purpose of this bill is to reduce the tax on motor fuel.
    
    According to our interpretation, the passage of this bill would reduce the flat rate component of the Motor Fuel Excise Tax from the current rate of 20.5 cents per gallon to 15 cents per gallon. While the bill drafter possibly also sought to delete the variable rate component of the Motor Fuel Excise Tax (i.e., 5% of the average wholesale price of fuel), it is our interpretation that the variable rate component would remain intact because of other sections of the West Virginia Code related to the imposition of such tax. As of January 1, 2012, the variable rate portion of the Motor Fuel Excise Tax is 12.9 cents per gallon. The reduction in the flat rate component of the tax would result in a loss to the State Road Fund of nearly $60 million per year.
    
    Additional administrative costs to the State Tax Department would be minimal.



Memorandum


    The stated purpose of this bill is to reduce the tax on motor fuel.
    
    The proposed bill reduces the flat rate component of the tax from $.205 per invoiced gallon to $.15. Although the bill deletes the variable rate component in section 11-14C-5(a) and (b), it does not remove the variable rate component in any other section of the code. As a result, the variable rate component would remain intact.
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov