FISCAL NOTE



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 extend the alternative-fuel motor vehicles tax credit for 10 years and to make the credit retroactive from the expiration of the initial credit. According to our interpretation, passage of this bill would reestablish the alternative-fuel motor vehicles tax credit and would include eligible vehicles purchased from June 6, 2006 through June 5, 2016. While the initial credit program began slowly, the rapid growth in qualifying vehicles, particularly hybrid vehicles, resulted in a rapid escalation of the amount of credit claimed. As the number of qualifying vehicles continues to increase, the potential annual revenue reduction attributable to the reestablished tax credit may approach several million dollars annually. Passage of this bill would result in no additional administrative costs to the State Tax Department.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
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


Explanation of above estimates (including long-range effect):


Passage of this bill would reestablish the alternative-fuel motor vehicles tax credit and would include eligible vehicles purchased from June 6, 2006 through June 5, 2016. While the initial credit program began slowly, the rapid growth in qualifying vehicles, particularly hybrid vehicles, resulted in a rapid escalation of the amount of credit claimed. As the number of qualifying vehicles continues to increase, the potential annual revenue reduction attributable to the reestablished tax credit may approach several million dollars annually. U.S. sales of hybrid cars grew rapidly from just 9,500 in 2000 to more than 350,000 in 2007. According to the most recent update from the J.D. Power and Associates Automotive Forecasting Services Hybrid-Electric Vehicle Outlook SM, U.S. hybrid-electric vehicle sales volumes are anticipated to grow to 780,000 by 2012 or more than double the 2007 sales level. Since this bill provides tax credits for vehicles purchased after the prior expiration date of the credit program, Taxpayers may need to file amended returns to claim the credit for qualifying vehicles purchased in the latter half of 2006 and in 2007. However, passage of this bill would result in only minimal additional administrative costs to the State Tax Department.



Memorandum






    Person submitting Fiscal Note: Mark Muchow
    Email Address: kpetry@tax.state.wv.us