Date Requested:March 21, 2013
Time Requested:02:15 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R2766 Introduced SB593
CBD Subject: RAISE CIGARETTE TAX
FUND(S)
General Revenue Fund, West Virginia Medical Services Fund, Civil Contingent Fund
Sources of Revenue
General Fund,Other Fund West Virginia Medical Ser
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 increase the excise tax on cigarettes and other tobacco products. The bill also provides for distribution of the increased revenue.
    
     As written, this bill would increase the tax on each twenty cigarettes from $0.55 to $1.55 and would increase the tax on tobacco products other than cigarettes from 7 percent of the wholesale price to 50 percent of the wholesale price. The bill also specifies how the tax is to be distributed.
    
     According to our interpretation and based upon available information, the tax increases would result in additional annual revenue of roughly $135.1 million per year. Assuming that the revenue dedication provision in the bill only applies to the tax on tobacco products other than cigarettes, the tax increases would result in an increase in the General Revenue Fund of roughly $118.2 million per year, roughly $16.7 million per year for the West Virginia Medical Services Fund, and roughly $0.2 million per year for the Civil Contingent Fund. However, if the revenue dedication provision (i.e., 75 percent to the West Virginia Medical Services Fund, 1 percent to the Civil Contingent Fund and the balance {i.e., 24 percent} to the General Revenue Fund) applies to both the tax on cigarettes and the tax on other tobacco products, passage of the bill would result in a decrease in the General Revenue Fund of roughly $53.7 million per year, an increase for the West Virginia Medical Services Fund of roughly $186.3 million per year and an increase in the Civil Contingent Fund of roughly $2.5 million per year.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 in FY2014.
    

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 10,000 0
Personal Services 0 0 0
Current Expenses 0 500 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 9,500 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     As written, this bill would increase the tax on each twenty cigarettes from $0.55 to $1.55 and would increase the tax on tobacco products other than cigarettes from 7 percent of the wholesale price to 50 percent of the wholesale price. The bill also specifies how the tax is to be distributed.
    
     According to our interpretation and based upon available information, the tax increases would result in additional annual revenue of roughly $135.1 million per year. Assuming that the revenue dedication provision in the bill only applies to the tax on tobacco products other than cigarettes, the tax increases would result in an increase in the General Revenue Fund of roughly $118.2 million per year, roughly $16.7 million per year for the West Virginia Medical Services Fund, and roughly $0.2 million per year for the Civil Contingent Fund. However, if the revenue dedication provision (i.e., 75 percent to the West Virginia Medical Services Fund, 1 percent to the Civil Contingent Fund and the balance {i.e., 24 percent} to the General Revenue Fund) applies to both the tax on cigarettes and the tax on other tobacco products, passage of the bill would result in a decrease in the General Revenue Fund of roughly $53.7 million per year, an increase for the West Virginia Medical Services Fund of roughly $186.3 million per year and an increase in the Civil Contingent Fund of roughly $2.5 million per year.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 in FY2014.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov