FISCAL NOTE
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 exempt heating oil used for residential purposes from the Motor Fuel Excise Tax.
As written, the passage of this bill would result in a loss to the State Road Fund of at least $6.0 million per year. The proposed bill creates a per se exemption from the fixed rate component of the Motor Fuel Excise Tax for the sales of heating fuel used in a private dwelling, and creates a similar per se exemption from the variable rate component of the Motor Fuel Excise Tax. Under current law, a refundable exemption from the flat rate component is available for all gallons of special fuel used for heating any public or private dwelling. Although this bill creates a per se exemption from both components of the Motor Fuel Excise Tax, it does not change the point of taxation, which is currently at the terminal rack. At the same time “heating fuel” is withdrawn from a terminal rack, it is not known that the fuel will be used exclusively for heating a private dwelling. If the fuel can be used in an internal combustion engine at the time of withdrawal, it remains taxable.
Additional administrative costs to the State Tax Department would be $9,000 next fiscal year for due to programming changes for the new exemption. Thereafter, there would be no additional costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2013
Increase/Decrease
(use"-") |
2014
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
9,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
9,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-6,000,000 |
Explanation of above estimates (including long-range effect):
As written, the passage of this bill would result in a loss to the State Road Fund of at least $6.0 million per year. The proposed bill creates a per se exemption from the fixed rate component of the Motor Fuel Excise Tax for the sales of heating fuel used in a private dwelling, and creates a similar per se exemption from the variable rate component of the Motor Fuel Excise Tax. Under current law, a refundable exemption from the flat rate component is available for all gallons of special fuel used for heating any public or private dwelling. Although this bill creates a per se exemption from both components of the Motor Fuel Excise Tax, it does not change the point of taxation, which is currently at the terminal rack. At the same time “heating fuel” is withdrawn from a terminal rack, it is not known that the fuel will be used exclusively for heating a private dwelling. If the fuel can be used in an internal combustion engine at the time of withdrawal, it remains taxable.
It should also be noted that other home heating sources (e.g., natural gas, electricity) are also subject to state and local consumption taxes. Therefore, exempting special fuel and propane for home heating from Motor Fuel Sales Tax would create an tax preference for the use of these fuels in home heating rather than the use of electricity or natural gas.
Additional administrative costs to the State Tax Department would be $9,000 next fiscal year for due to programming changes for the new exemption. Thereafter, there would be no additional costs.
Memorandum
The stated purpose of this bill is to exempt heating oil used for residential purposes from the Motor Fuel Excise Tax.
The proposed bill amends the definition of “motor fuel” in W. Va. Code §11-14C-2 (57) by adding the proviso “but does not include heating fuel used exclusively for heating a private dwelling.” The bill then creates a per se exemption from the fixed rate component of the motor fuel excise tax in Code §11-14C-9(a) for “sale of heating fuel for use in heating private dwellings”. The proposed bill creates a similar exemption from the variable rate component in 11-14C-9 (b).
This bill does not change the point of taxation, which is currently at the terminal “rack”. Under current statute, there is a refundable exemption for all gallons of special fuel used for heating any public or private dwelling. This bill could be broad in nature because of difficulty in tracking the actual use of such fuel.
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov