Date Requested:February 16, 2013
Time Requested:10:08 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1464 Introduced HB2060
CBD Subject: PENNY POP TAX FOR PARKS
FUND(S)
General Revenue Fund, State Parks Maintenance and Improvements Fund & Medical Center - Educational Programs Fund
Sources of Revenue
General Fund,Other Fund State Parks Maintenance a
Legislation creates:
A New Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

     The stated purpose of this bill is to increase the soft drinks tax by $0.01 and dedicating the increase to construction, maintenance and improvements of state parks.
    
     As written, this bill proposes an additional excise tax on bottled soft drinks, syrups and dry mixtures, effective July 1, 2013. While the stated purpose indicates the Soft Drinks Tax would be increased by $0.01, the language in the bill actually provides for an additional $0.01per unit tax on bottled soft drinks and powders and an additional $0.80 per gallon tax on soft drink syrup. Since the rates for the additional excise tax mirror the existing tax rates, the bill essentially doubles the current tax. Additionally, the bill provides that the revenue collected from the additional excise tax, less costs of administration, are to be deposited into a new fund to be named State Parks Maintenance and Improvements Fund.
    
     According to our interpretation and assuming the costs of administration provided by the bill mean the same discounts and allowances provided for the current tax on soft drinks, passage of this bill would provide the State Parks Maintenance and Improvements Fund with roughly $15.6 million per year. The increase proposed by this bill would be expected to be passed on to the consumer and some consumers would be expected to reduce consumption from current levels due to the higher prices under the new rates. Although the Medical Center - Educational Programs Fund (for the construction, maintenance and operation of a four-year school of medicine, dentistry and nursing of West Virginia University) would continue to receive revenue from the Soft Drinks Tax at current tax rates, the reduced consumption would result in a reduction in the Medical Center - Educational Programs Fund of roughly $0.2 million per year. Additionally, the reduced consumption would result in a reduction in the General Revenue Fund of roughly $0.4 million per year from reduced sales tax collections on retail sales of soft drinks.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $80,000 during the current fiscal year due to programming changes and notifying taxpayers of the rate change. Thereafter, there would be no additional costs. The proposed effective date of July 1, 2013 may present additional administrative difficulties for the State Tax Department and soft drink bottlers and manufacturers.

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 80,000 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 80,000 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     As written, this bill proposes an additional excise tax on bottled soft drinks, syrups and dry mixtures, effective July 1, 2013. While the stated purpose indicates the Soft Drinks Tax would be increased by $0.01, the language in the bill actually provides for an additional $0.01per unit tax on bottled soft drinks and powders and an additional $0.80 per gallon tax on soft drink syrup. Since the rates for the additional excise tax mirror the existing tax rates, the bill essentially doubles the current tax. Additionally, the bill provides that the revenue collected from the additional excise tax, less costs of administration, are to be deposited into a new fund to be named State Parks Maintenance and Improvements Fund.
    
     According to our interpretation and assuming the costs of administration provided by the bill mean the same discounts and allowances provided for the current tax on soft drinks, passage of this bill would provide the State Parks Maintenance and Improvements Fund with roughly $15.6 million per year. The increase proposed by this bill would be expected to be passed on to the consumer and some consumers would be expected to reduce consumption from current levels due to the higher prices under the new rates. Although the Medical Center - Educational Programs Fund (for the construction, maintenance and operation of a four-year school of medicine, dentistry and nursing of West Virginia University) would continue to receive revenue from the Soft Drinks Tax at current tax rates, the reduced consumption would result in a reduction in the Medical Center - Educational Programs Fund of roughly $0.2 million per year. Additionally, the reduced consumption would result in a reduction in the General Revenue Fund of roughly $0.4 million per year from reduced sales tax collections on retail sales of soft drinks.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $80,000 during the current fiscal year due to programming changes and notifying taxpayers of the rate change. Thereafter, there would be no additional costs. The proposed effective date of July 1, 2013 may present additional administrative difficulties for the State Tax Department and soft drink bottlers and manufacturers.


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to increase the soft drinks tax by $0.01 and dedicating the increase to construction, maintenance and improvements of state parks.
    
     As written, the bill provides that the revenue collected from the additional excise tax, less costs of administration, are to be deposited into a new fund to be named State Parks Maintenance and Improvements Fund. Since the bill does not define “costs of administration, it is unclear if the discounts and allowances for the existing Soft Drinks Tax are to be applied to the proposed additional excise tax.