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 allow for a tax credit for coal companies that purchase new safety equipment that is approved by the Mine Safety Technology Task Force. As written, this bill would require the Mine Safety Technology Task Force to compile an annual list of new safety equipment that would improve coal mine health and safety and would permit a company that purchases new safety equipment that is on the list to claim a tax credit against the Minimum Severance Tax on Coal levied via W. Va. Code 11-12B et al. Since the State Tax Department does not have access to information such as the amount of new safety equipment that would be purchased and the bill does not clearly state how the credit would be calculated, we are unable to accurately estimate the potential revenue impact of the proposed tax credit. However, if the credit is solely applicable to the Minimum Severance Tax on Coal levied via W. Va. Code 11-12B et al., the revenue impact would be minimal since the current price of coal virtually eliminates the minimum tax. Application of the credit to other Severance Taxes on coal would result in significant declines in revenue. Additional administrative costs to the State Tax Department associated with this bill would be minimal. The Mine Safety Technology Task Force may incur additional administrative costs attributable to this bill.

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 require the Mine Safety Technology Task Force to compile an annual list of new safety equipment that would improve coal mine health and safety and would permit a company that purchases new safety equipment that is on the list to claim a tax credit against the Minimum Severance Tax on Coal levied via W. Va. Code 11-12B et al. Since the State Tax Department does not have access to information such as the amount of new safety equipment that would be purchased and the bill does not clearly state how the credit would be calculated, we are unable to accurately estimate the potential revenue impact of the proposed tax credit. However, if the credit is solely applicable to the Minimum Severance Tax on Coal levied via W. Va. Code 11-12B et al., the revenue impact would be minimal since the current price of coal virtually eliminates the minimum tax. Application of the credit to other Severance Taxes on coal would result in significant declines in revenue. Additional administrative costs to the State Tax Department associated with this bill would be minimal. The Mine Safety Technology Task Force may incur additional administrative costs attributable to this bill.

Memorandum

The stated purpose of this bill is to allow for a tax credit for coal companies that purchase new safety equipment that is approved by the Mine Safety Technology Task Force. As written, this bill would permit a company that purchases new safety equipment that is on the list to claim a 50 percent tax credit against the Minimum Severance Tax on Coal levied via W. Va. Code 11-12B et al. However, the bill does not provide any guidance on whether the credit is calculated as, 50 percent of the Minimum Severance Tax on Coal, 50 percent of the expenditures on new safety equipment, or some other measure.

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