FISCAL NOTE
FUND(S):
State Road Fund
Sources of Revenue:
Other Fund State Road 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 reduce the wholesale tax on heating fuel, off road fuels, kerosene and propane used for home heating purposes or off road use to 4.85% effective January 1, 2010.
As written, this bill proposes to reduce the wholesale tax on fuel consumed for off-road usage. Under current law, the Motor Fuel Excise Tax is composed of a flat rate (i.e., 20.5 cents per gallon) and a variable rate component. The variable rate component is equal to 5 percent of the average wholesale price of fuel. As of January 1, 2009, the variable rate was set at 11.7 cents per gallon (i.e., .05 x $2.34 per gallon). If the intent of the bill is to reduce the variable rate component to 4.85 percent of the average wholesale price of fuel (i.e., .0485 x $2.34 = 11.35 cents per gallon), the loss to the State Road Fund would be about $600,000 during FY2010 and roughly $1.5 million thereafter (assuming the average wholesale price remains unchanged).
Additional administrative costs to the Tax Department would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
4,050 |
665 |
665 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
4,050 |
665 |
665 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-600,000 |
-1,500,000 |
Explanation of above estimates (including long-range effect):
As written, this bill proposes to reduce the wholesale tax on fuel consumed for off-road usage. Under current law, the Motor Fuel Excise Tax is composed of a flat rate (i.e., 20.5 cents per gallon) and a variable rate component. The variable rate component is equal to 5 percent of the average wholesale price of fuel. As of January 1, 2009, the variable rate was set at 11.7 cents per gallon (i.e., .05 x $2.34 per gallon). If the intent of the bill is to reduce the variable rate component to 4.85 percent of the average wholesale price of fuel (i.e., .0485 x $2.34 = 11.35 cents per gallon), the loss to the State Road Fund would be about $600,000 during FY2010 and roughly $1.5 million thereafter (assuming the average wholesale price remains unchanged).
Additional administrative costs to the Tax Department would be minimal.
Memorandum
The stated purpose of this bill is to reduce the wholesale tax on heating fuel, off road fuels, kerosene and propane used for home heating purposes or off road use to 4.85% effective January 1, 2010.
As written, it is unclear how the wholesale tax rate in this bill is to be reduced. The bill proposes to change the wholesale tax rate on heating fuel, off road fuels, kerosene and propane used for home heating purposes or for off road use to 4.85 percent, but it does not state percent of “what”. It is unclear whether or not the current variable rate component of the Motor Fuel Excise Tax is to be reduced to 4.85 percent of the wholesale price of fuel or if something else is intended.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us