Date Requested:March 20, 2013
Time Requested:03:30 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R2750 Introduced HB2993
CBD Subject: FOOD & BEVERAGE SALES TAX
FUND(S)
County/local government funds
Sources of Revenue
Other Fund County and local governme
Legislation creates:
A New Program

Fiscal Note Summary

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

     The stated purpose of this bill is to allow local governments to levy a sales tax on food and beverages sold at restaurants. The bill providing for county and municipality options. The bill limits the total tax to three percent. The bill limits a municipal tax to two percent. The bill sets forth the procedures for counties and municipalities to use to impose the tax. The bill requires publication. The bill sets forth how the collected tax may be used. The bill sets forth apportionment of the tax between local jurisdictions. The bill sets forth exemptions from the tax. The bill defines terms. The bill provides criminal penalties.
    
     As written, this bill would allow for counties to levy a sales tax on restaurants of up to 3 percent and municipalities to levy a sales tax on restaurants of up to 2 percent, for a maximum local tax rate of 5 percent. This would be in addition to the Statewide Consumers Sales Tax of 6 percent. We are unable to accurately estimate how much revenue each county and/or municipality may gain from the passage of this bill since it is unknown which counties and municipalities would levy such a tax and at what rate.
    
     This bill is in violation of the Streamlined Sales and Use Tax Agreement (SSTP), of which West Virginia is a member. West Virginia Code §11-15B-33 requires the Tax Commissioner to administer local sales and use taxes. As written, this bill does not provide for State-level administration. Also, the tax imposition on food sold at a restaurant is at a different rate than allowed by §11-15 or §11-15B. The Streamlined Sales Tax Agreement allows separate rates on some items, but not food sold at a restaurant. The State could potentially lose some future sales tax collections attributable to retail collection associated with its participation in SSTP if it loses its membership as a result of the agreement violation.
    
     There would be no additional administrative costs to the State Tax Department from the passage of this bill as it is currently written.

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 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 allow for counties to levy a sales tax on restaurants of up to 3 percent and municipalities to levy a sales tax on restaurants of up to 2 percent, for a maximum local tax rate of 5 percent. This would be in addition to the Statewide Consumers Sales Tax of 6 percent. We are unable to accurately estimate how much revenue each county and/or municipality may gain from the passage of this bill since it is unknown which counties and municipalities would levy such a tax and at what rate.
    
     This bill is in violation of the Streamlined Sales and Use Tax Agreement (SSTP), of which West Virginia is a member. West Virginia Code §11-15B-33 requires the Tax Commissioner to administer local sales and use taxes. As written, this bill does not provide for State-level administration. Also, the tax imposition on food sold at a restaurant is at a different rate than allowed by §11-15 or §11-15B. The Streamlined Sales Tax Agreement allows separate rates on some items, but not food sold at a restaurant. The State could potentially lose some future sales tax collections attributable to retail collection associated with its participation in SSTP if it loses its membership as a result of the agreement violation.
    
     There would be no additional administrative costs to the State Tax Department from the passage of this bill as it is currently written.


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to allow local governments to levy a sales tax on food and beverages sold at restaurants. The bill providing for county and municipality options. The bill limits the total tax to three percent. The bill limits a municipal tax to two percent. The bill sets forth the procedures for counties and municipalities to use to impose the tax. The bill requires publication. The bill sets forth how the collected tax may be used. The bill sets forth apportionment of the tax between local jurisdictions. The bill sets forth exemptions from the tax. The bill defines terms. The bill provides criminal penalties.
    
     The provision that the tax shall be collected in a manner prescribed by the county commission conflicts with W. Va. Code §11-15B-33, which requires the Tax Commissioner to administer local sales and use taxes.
    
     The bill is silent as to the administration of the tax imposed by a municipality. To remain in compliance with the Streamlined Sales and Use Tax Agreement of which West Virginia is a member, and with W. Va. Code §11-15B-33, administration of the tax would have to be by the Tax Commissioner.
    
     Also, the tax imposition on food sold at a restaurant at a different rate than allowed by §11-15 or §11-15B is in violation of the Streamlined Sales and Use Tax Agreement. The Agreement allows separate rates on some items, but not food sold at a restaurant.