FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 08:31 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1901 |
Introduced |
HB2169 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
State Road Fund
Sources of Revenue:
Other Fund State Road Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to remove the variable gas tax rate.
According to our interpretation, the proposed bill would remove the imposition of a variable tax rate on motor fuels. Under current code, the motor fuel excise tax is composed of a flat rate tax of 20.5 cents per invoiced gallon and a variable rate tax which is 5 percent of the average wholesale price of each motor fuel as determined annually by the State Tax Commissioner. No effective date is given in the bill; therefore, if passed, the legislation would become effective 90 days from passage.
Per our interpretation, the legislation, if passed, would reduce State Road Fund collections by an average of $215.0 million per year beginning in FY2026 based on the current variable tax level of 15.2 cents per gallon.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
16,500 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
16,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-215,000,000 |
-215,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would remove the imposition of a variable tax rate on motor fuels. Under current code, the motor fuel excise tax is composed of a flat rate tax of 20.5 cents per invoiced gallon and a variable rate tax which is 5 percent of the average wholesale price of each motor fuel as determined annually by the State Tax Commissioner. No effective date is given in the bill; therefore, if passed, the legislation would become effective 90 days from passage.
Per our interpretation, the legislation, if passed, would reduce State Road Fund collections by an average of $215.0 million per year beginning in FY2026 based on the current variable tax rate of 15.2 cents per gallon.
As of January 1, 2025, the combined motor fuel excise tax rate in West Virginia is 35.7 cents per gallon. Among West Virginia’s contiguous states, the current tax rate averages 30.1 cents per gallon in Kentucky, 47.19 cents per gallon in Maryland, 38.51 cents per gallon in Ohio, 58.7 cents per gallon in Pennsylvania, and 39.1 cents per gallon in Virginia. The provisions of this bill would reduce the West Virginia tax rate to 20.5 cents per gallon.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025.
Memorandum
The stated purpose of this bill is to remove the variable gas tax rate.
Subsection §11-14C-5(b) addresses the determination of the “average wholesale price” of all motor fuel, which only applies to the variable tax rate. This section would be redundant after the elimination of the variable tax rate.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov