Date Requested:February 10, 2005
Time Requested:04:22 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005r537 intro hb2133
CBD Subject: food sales tax phazed out
FUND(S)
General Revenue Fund
Sources of Revenue
General 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 gradually eliminate the consumers sales tax on food and food products sold for human consumption off the premises where sold.
    
    As stated, the passage of this bill would eliminate the Consumers Sales Tax on food sold for human consumption off the premises where sold by a three-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of revenue loss to the General Revenue Fund. Fiscal Year 2009 represents the first full year of removal of the Consumers Sales Tax on food sold at grocery stores.
    
     Sales of Food
     Meant for Home
     Consumption Only
    
     FY2006 -$46.4 million
    
     FY2007 -$97.1 million
    
     FY2008 -$147.8 million
    
     FY2009 -$152.0 million
    
    Additional administrative costs to the Tax Department would be about $24,000 per year until the tax is eliminated due to notifying taxpayers of the rate changes. Thereafter, there would be no additional administrative costs.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 23,925 23,925 0
Personal Services 0 0 0
Current Expenses 23,925 23,925 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -46,400,000 -152,000,000
3. Explanation of above estimates (including long-range effect):
    As stated, the passage of this bill would eliminate the Consumers Sales Tax on food sold for human consumption off the premises where sold by a three-year phase-out. According to our interpretation, this bill would apply to food items sold at grocery stores. The following table provides estimates of revenue loss to the General Revenue Fund. Fiscal Year 2009 represents the first full year of removal of the Consumers Sales Tax on food sold at grocery stores.
    
     Sales of Food
     Meant for Home
     Consumption Only
    
     FY2006 -$46.4 million
    
     FY2007 -$97.1 million
    
     FY2008 -$147.8 million
    
     FY2009 -$152.0 million
    
    Additional administrative costs to the Tax Department would be about $24,000 per year until the tax is eliminated due to notifying taxpayers of the rate changes. Thereafter, there would be no additional administrative costs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to gradually eliminate the consumers sales tax on food and food products sold for human consumption off the premises where sold.
    
    The bill does not specifically define food or “food products,” nor does it provide guidance for the requirement that the food be sold for consumption off the premises where sold.