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 abolish the business franchise tax effective July 1, 2009. Under current law, the Business Franchise Tax rate is being phased down to zero through a series of annual reductions in the tax rate. As written, this bill would accelerate the elimination of the tax from tax years beginning on or after January 1, 2015 to tax years beginning on or after July 1, 2009. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows: Fiscal Year Change in Revenue 2010 -$28,900,000 2011 -$79,100,000 2012 -$80,000,000 2013 -$67,000,000 2014 -$48,100,000 2015 -$23,600,000 2016 -$ 4,800,000 Due to the proposed change effective for tax years beginning on or after July 1, 2009, additional administrative cost to the State Tax Department associated with this bill would be roughly $36,000 in the current fiscal year.



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 36,000 0 0
Personal Services 0 0 0
Current Expenses 35,000 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 1,000 0 0
2. Estimated Total Revenues 0 -28,900,000 -80,000,000


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


Under current law, the Business Franchise Tax rate is being phased down to zero through a series of annual reductions in the tax rate. Passage of this bill would accelerate the elimination of the tax from tax years beginning on or after January 1, 2015 to tax years beginning on or after July 1, 2009. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows: Fiscal Year Change in Revenue 2010 -$28,900,000 2011 -$79,100,000 2012 -$80,000,000 2013 -$67,000,000 2014 -$48,100,000 2015 -$23,600,000 2016 -$ 4,800,000 Due to the proposed change effective for tax years beginning on or after July 1, 2009, additional administrative cost to the State Tax Department associated with this bill would be roughly $36,000 in the current fiscal year.



Memorandum






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