Date Requested:February 15, 2013
Time Requested:03:15 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1055 Introduced HB2119
CBD Subject: EXCISE TAX ON OBSCENE MATERIALS
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 tax the sale or rental of obscene materials. The bill defines terms and sets forth collection and record keeping requirements. The bill also sets forth liabilities and establishes that the tax be deposited in the General Revenue Fund.
    
     As written, we are unable to estimate the revenue gain to the General Revenue Fund from the passage of this bill. It is very broad and subjective in nature as to the type of materials that would be subject to such a tax. Also, there may be some compliance issues due to the availability of obtaining such materials electronically.
    
     Additional administrative costs to the State Tax Department would be $153,600 in FY2014 due to programming costs associated with the new tax created by the passage of this bill. Thereafter, there would be no additional administrative costs.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 153,600 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 153,600 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 tax the sale or rental of obscene materials. The bill defines terms and sets forth collection and record keeping requirements. The bill also sets forth liabilities and establishes that the tax be deposited in the General Revenue Fund.
    
     As written, we are unable to estimate the revenue gain to the General Revenue Fund from the passage of this bill. It is very broad and subjective in nature as to the type of materials that would be subject to such a tax. Also, there may be some compliance issues due to the availability of obtaining such materials electronically.
    
     Additional administrative costs to the State Tax Department would be $153,600 in FY2014 due to programming costs associated with the new tax created by the passage of this bill. Thereafter, there would be no additional administrative costs.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to tax the sale or rental of obscene materials. The bill defines terms and sets forth collection and record keeping requirements. The bill also sets forth liabilities and establishes that the tax be deposited in the General Revenue Fund.
    
     There are several concerns about the bill. Three shortcomings could lead to difficulties in administering the tax. The bill would not be subject to the Tax Procedure and Administration Act (Code §11-10-1, et seq.) because it is not expressly listed among the taxes to which that Act applies. Additionally, it is not clear what counts as a “separate piece or article” of obscene material upon which the tax is to be imposed. Also, the definitions of what constitutes obscene material are too broad and subjective to be very useful in determining which sales the tax should apply to.
    
     Finally, because this bill would impose a tax on certain kinds of disfavored speech, it raises federal constitutional issues implicating the first amendment to the Constitution, which may prove fatal to its implementation.