FISCAL NOTE
FUND(S):
General Revenue Fund, Prevention, Intervention, Treatment and Recovery Fund
Sources of Revenue:
General Fund,Other Fund Prevention, Intervention,
Legislation creates:
A New Program,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 provide funding for substance abuse services through increased taxes on beer, wine and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment and Recovery Fund to fund substance abuse programs.
As written, this bill would increase the Beer Barrel Tax from $5.50 per barrel to $11.00 per barrel, increase the Wine Liter Tax from $0.26406 per liter to $0.52812 per liter, and require the Alcohol Beverage Control Administration to set wholesale prices on liquor and wine to yield an additional profit of $6.5 million per year. The bill also provides that revenue attributable to $5.50 of the new Beer Barrel Tax, revenue attributable to $0.26406 of the new Wine Liter Tax, and the additional $6.5 million from liquor and wine be paid into the Prevention, Intervention, Treatment and Recovery Fund with the funds to be expended in a manner consistent with the “Governor’s Comprehensive Strategic Plan to Address Substance Abuse in West Virginia.”
Since the bill does not have an internal effective date for the change in tax rates, less than a full-year of revenue enhancement may be realized in Fiscal Year 2015 due to a lag in the timing of tax receipts. Higher than normal tax receipts would occur prior to the rate change and lower than usual activity would occur immediately after the rate change due to Taxpayer behavior shifting purchases to a period prior to the tax rate increases. The following revenue estimates reflect a full year revenue effect that might not fully be realized until Fiscal Year 2016 (the Net Gain amounts include the increase in revenue attribute to the change in the tax rate and the reduction in the Consumers Sales and Service Tax attributable to declines in consumption attributable to higher prices for the indicated commodities).
Tax Type Net Gain
Beer Barrel $ 7.10 Million
Wine Liter $ 2.00 Million
Alcohol $ 6.50 Million
Sales Tax -$ 0.58 Million
Net Change $ 15.02 Million
The impact on the General Revenue Fund for the first full fiscal year of under the new tax rates is estimated as follows:
Tax Type General Revenue
Beer Barrel -$ 0.20 Million
Wine Liter $ 0.00 Million
Alcohol $ 0.00 Million
Sales Tax -$ 0.58 Million
Net Change -$ 0.78 Million
The Prevention, Intervention, Treatment and Recovery Fund would receive the following in the first full fiscal year under the new rates.
Tax Type Net Gain
Beer Barrel $ 7.30 Million
Wine Liter $ 2.00 Million
Alcohol $ 6.50 Million
Net Change $15.80 Million
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $6,000 in the year of enactment. The Alcohol Beverage Control Administration and the agency administering the Prevention, Intervention, Treatment and Recovery Fund would also incur additional administrative costs.
Fiscal Note Detail
Effect of Proposal |
Fiscal Year |
2014 Increase/Decrease (use"-") |
2015 Increase/Decrease (use"-") |
Fiscal Year (Upon Full Implementation) |
1. Estmated Total Cost |
6,000 |
0 |
0 |
Personal Services |
0 |
0 |
0 |
Current Expenses |
0 |
0 |
0 |
Repairs and Alterations |
0 |
0 |
0 |
Assets |
0 |
0 |
0 |
Other |
6,000 |
0 |
0 |
2. Estimated Total Revenues |
0 |
0 |
15,020,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would increase the Beer Barrel Tax from $5.50 per barrel to $11.00 per barrel, increase the Wine Liter Tax from $0.26406 per liter to $0.52812 per liter, and require the Alcohol Beverage Control Administration to set wholesale prices on liquor and wine to yield an additional profit of $6.5 million per year. The bill also provides that revenue attributable to $5.50 of the new Beer Barrel Tax, revenue attributable to $0.26406 of the new Wine Liter Tax, and the additional $6.5 million from liquor and wine be paid into the Prevention, Intervention, Treatment and Recovery Fund with the funds to be expended in a manner consistent with the “Governor’s Comprehensive Strategic Plan to Address Substance Abuse in West Virginia.”
Since the bill does not have an internal effective date for the change in tax rates, less than a full-year of revenue enhancement may be realized in Fiscal Year 2015 due to a lag in the timing of tax receipts. Higher than normal tax receipts would occur prior to the rate change and lower than usual activity would occur immediately after the rate change due to Taxpayer behavior shifting purchases to a period prior to the tax rate increases. The following revenue estimates reflect a full year revenue effect that might not fully be realized until Fiscal Year 2016 (the Net Gain amounts include the increase in revenue attribute to the change in the tax rate and the reduction in the Consumers Sales and Service Tax attributable to declines in consumption attributable to higher prices for the indicated commodities).
Tax Type Net Gain
Beer Barrel $ 7.10 Million
Wine Liter $ 2.00 Million
Alcohol $ 6.50 Million
Sales Tax -$ 0.58 Million
Net Change $ 15.02 Million
The impact on the General Revenue Fund for the first full fiscal year of under the new tax rates is estimated as follows:
Tax Type General Revenue
Beer Barrel -$ 0.20 Million
Wine Liter $ 0.00 Million
Alcohol $ 0.00 Million
Sales Tax -$ 0.58 Million
Net Change -$ 0.78 Million
The Prevention, Intervention, Treatment and Recovery Fund would receive the following in the first full fiscal year under the new rates.
Tax Type Net Gain
Beer Barrel $ 7.30 Million
Wine Liter $ 2.00 Million
Alcohol $ 6.50 Million
Net Change $15.80 Million
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $6,000 in the year of enactment. The Alcohol Beverage Control Administration and the agency administering the Prevention, Intervention, Treatment and Recovery Fund would also incur additional administrative costs.
Memorandum
The stated purpose of this bill is to provide funding for substance abuse services through increased taxes on beer, wine and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment and Recovery Fund to fund substance abuse programs.
The bill title may be defective. The bill title, in part, indicates the Code of West Virginia is being amended to add a new article, designated §16-43-1 and §16-43-2. However, the article already exists.
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov