Date Requested:February 28, 2012
Time Requested:04:20 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2242 Comm. Sub2. SB624
CBD Subject: ALTERNATIVE-FUEL MOTOR VEHICLES
FUND(S)
General Revenue Fund, State Road Fund
Sources of Revenue
General Fund,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.

    As written, this bill would permit any entity, including a governmental entity or a nonprofit entity, to transfer the right to the tax credit available for the purchase or conversion of alternative fuel vehicles (where for purposes of the transfer provision, vehicles are limited to liquefied natural gas vehicles, compressed natural gas vehicles, and natural gas hydrocarbon and derivative vehicles) or for the construction of alternative fuel vehicle refueling infrastructures. The bill provides that transferors or sellers must apply to the State Tax Department for approval of any transfer, sale or assignment of the tax credit. Additionally, the bill provides that the proceeds from the sale or transfer of the credit are exempt from the Consumers Sales and Service Tax, the Corporation Net Income Tax, and the Personal Income Tax. The bill would also create a new component to the Motor Fuel Excise Tax. Vehicles not exceeding one ton in capacity that use liquefied natural gas or compressed natural gas as motor fuel would be assessed a flat tax of $100 per year in lieu of the per gallon Motor Fuel Excise Tax. Similarly fueled vehicles exceeding one ton in capacity would be assessed a flat tax of $150 per year in lieu of the per gallon Motor Fuel Excise Tax. The bill provides that government-owned vehicles would be exempt from the new tax. The bill provides that the State Tax Commissioner would issue an annual decal to signify payment of the flat tax. The bill provides that the new flat tax would begin July 1, 2012.
    
    Under existing law, taxpayers may receive tax credits equal to 35 percent of the purchase price of an alternative-fuel motor vehicle up to $7,500 for vehicles weighing less than 26,000 pounds and $25,000 for vehicles weighing more than 26,000 pounds. In addition, a taxpayer may receive a tax credit equal to 50 percent of the cost of installation of alternative fuel vehicle refueling infrastructure up to $250,000 per installation if not accessible to the public or $312,500 if accessible to the public. Allowing governments to sell credits for just a few buses, cars and refueling facilities could easily result in the creation of a few million dollars worth of State tax credits. Revenues from the additional motor vehicle registration fee in lieu of fuel tax for non-governmental compressed natural gas vehicles would be minimal.
    
    Current law may actually discourage purchases of compressed natural gas vehicles because tax credits of similar size are available for flex fuel vehicles which would comprise much than more than 99 percent of all sales.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 per year.
    

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):
    As written, this bill would permit any entity, including a governmental entity or a nonprofit entity, to transfer the right to the tax credit available for the purchase or conversion of alternative fuel vehicles (where for purposes of the transfer provision, vehicles are limited to liquefied natural gas vehicles, compressed natural gas vehicles, and natural gas hydrocarbon and derivative vehicles) or for the construction of alternative fuel vehicle refueling infrastructures. The bill provides that transferors or sellers must apply to the State Tax Department for approval of any transfer, sale or assignment of the tax credit. Additionally, the bill provides that the proceeds from the sale or transfer of the credit are exempt from the Consumers Sales and Service Tax, the Corporation Net Income Tax, and the Personal Income Tax. The bill would also create a new component to the Motor Fuel Excise Tax. Vehicles not exceeding one ton in capacity that use liquefied natural gas or compressed natural gas as motor fuel would be assessed a flat tax of $100 per year in lieu of the per gallon Motor Fuel Excise Tax. Similarly fueled vehicles exceeding one ton in capacity would be assessed a flat tax of $150 per year in lieu of the per gallon Motor Fuel Excise Tax. The bill provides that government-owned vehicles would be exempt from the new tax. The bill provides that the State Tax Commissioner would issue an annual decal to signify payment of the flat tax. The bill provides that the new flat tax would begin July 1, 2012.
    
    Under existing law, taxpayers may receive tax credits equal to 35 percent of the purchase price of an alternative-fuel motor vehicle up to $7,500 for vehicles weighing less than 26,000 pounds and $25,000 for vehicles weighing more than 26,000 pounds. In addition, a taxpayer may receive a tax credit equal to 50 percent of the cost of installation of alternative fuel vehicle refueling infrastructure up to $250,000 per installation if not accessible to the public or $312,500 if accessible to the public. Allowing governments to sell credits for just a few buses, cars and refueling facilities could easily result in the creation of a few million dollars worth of State tax credits. Revenues from the additional motor vehicle registration fee in lieu of fuel tax for non-governmental compressed natural gas vehicles would be minimal.
    
    Current law may actually discourage purchases of compressed natural gas vehicles because tax credits of similar size are available for flex fuel vehicles which would comprise much than more than 99 percent of all sales.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 per year.
    


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