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 provide individual and commercial users of the West Virginia Turnpike with a tax credit. The bill provides individuals with a maximum $300 tax credit and residents of Fayette, Greenbrier, Kanawha, McDowell, Mercer, Monroe, Raleigh, Summers and Wyoming counties with a presumptive $25 credit. The bill also provides commercial users with a maximum tax credit of $1,500. The bill additionally provides for an a full credit for individuals for the cost incurred in purchasing a West Virginia Parkways Economic Development and Authority PAC card. To the extent that the total tolls paid by the taxpayer exceeds the maximum credit allowed, the taxpayer may also be able to deduct the excess as an ordinary business expense. As written, this bill would repeal an existing Personal Income Tax decreasing modification related to tolls for travel on West Virginia toll roads and create a number of tax credits related to tolls paid for using the West Virginia Turnpike. According to our interpretation, the credits created would not necessarily be mutually exclusive. That is, a taxpayer may qualify for more than one credit on the same West Virginia turnpike usage. The State Tax Department does not have access to the information necessary to accurately estimate the potential revenue impact of this bill. Assuming that all Personal Income Tax returns with the specified credits would be accepted as filed, additional administrative costs to the State Tax Department associated with this bill would be minimal. However, any requirement to verify the credit would result in significant additional administrative costs.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2009 Increase/Decrease (use"-")	2010 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):

As written, this bill would repeal an existing Personal Income Tax decreasing modification related to tolls for travel on West Virginia toll roads and create a number of tax credits related to tolls paid for using the West Virginia Turnpike. According to our interpretation, the credits created would not necessarily be mutually exclusive. That is, a taxpayer may qualify for more than one credit on the same West Virginia turnpike usage. The State Tax Department does not have access to the information necessary to accurately estimate the potential revenue impact of this bill. Based upon preliminary information, over 2,000 tax year 2007 Personal Income Tax returns reported the decreasing modification that this bill would repeal. It is expected that the tax credits proposed by this bill would result in a significantly higher reporting of usage. Additionally, for 2008, tolls on the West Virginia Turnpike totaled more than $56 million. The application of a portion of this amount as credits against either the Personal Income Tax or the Corporation Net Income Tax would result in a sizable reduction in the General Revenue Fund. Assuming that all Personal Income Tax returns with the specified credits would be accepted as filed, additional administrative costs to the State Tax Department associated with this bill would be minimal. However, any requirement to verify the credit would result in significant additional administrative costs.

Memorandum

The stated purpose of this bill is to provide individual and commercial users of the West Virginia Turnpike with a tax credit. The bill provides individuals with a maximum $300 tax credit and residents of Fayette, Greenbrier, Kanawha, McDowell, Mercer, Monroe, Raleigh, Summers and Wyoming counties with a presumptive $25 credit. The bill also provides commercial users with a maximum tax credit of $1,500. The bill additionally provides for an a full credit for individuals for the cost incurred in purchasing a West Virginia Parkways Economic Development and Authority PAC card. To the extent that the total tolls paid by the taxpayer exceeds the maximum credit allowed, the taxpayer may also be able to deduct the excess as an ordinary business expense. As written, this bill would create: (a) a credit for tolls paid for using the West Virginia Turnpike; (b) a presumptive credit for tolls paid by residents of selected counties for using the West Virginia Turnpike; and ( c) a credit for tolls paid electronically for using the West Virginia Turnpike. It does not appear that the credits are mutually exclusive. That is, a Taxpayer may be able to claim more than one of the credits for the same tolls. The bill, as stated in proposed W. Va. Code §11-21-10b(a), provides that the “maximum credit allowed shall be the greater of $300 or the cost expended by the taxpayer to obtain an E-Z pass through the Parkways Authority Commuter Discount Program.” As written, the maximum credit is not limited. The bill creates a presumptive $25 credit for residents of residents of Fayette, Greenbrier, Kanawha, McDowell, Mercer, Monroe, Raleigh, Summers and Wyoming Counties. This may be a violation of the W. Va. Constitution, which states that “taxation shall be equal and uniform throughout the state.” If residents of some counties get a presumptive credit, and others do not, the credits would not be uniform.

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