FISCAL NOTE



FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund,Other Fund local property tax

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 the bill is to provide for mandated salvage valuation for property tax purposes, of tangible personal property and computer servers directly used in certain high technology businesses or an Internet advertising business, and to exempt from the consumers sales and service tax and use tax, all purchases of computer software, computers, servers, and building materials and tangible personal property installed into a building or facility for direct use in a high technology business or Internet advertising business, and to provide for a contractor’s pass through exemption for such purchases. As written, this bill would qualify servers directly used in a high technology business or in an Internet advertising business for valuation for Property Tax purposes at 5% of the original cost of the items. The bill would require the assessor of the county in which a potentially qualifying item is located to determine, in writing, whether or not the item is directly used in a high technology business or in an Internet advertising business. The proposed change in valuation would result in a reduction of roughly $210,000 per year in local government revenue. Additionally, the bill extends a Consumers Sales and Service Tax exemption for selected computer hardware and software to the tangible personal property to be installed into a building or facility for direct use in a high technology business or in an Internet advertising business. Due to the potential for broad application of the proposed Consumers Sales and Service Tax exemption, we are unable to accurately estimate the revenue impact related to the sales tax exemption. Additional administrative costs to the State Tax Department associated with this bill would be roughly $25,000. There would be no additional costs for local governments.



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 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 qualify servers directly used in a high technology business or in an Internet advertising business for valuation for Property Tax purposes at 5% of the original cost of the items. The bill would require the assessor of the county in which a potentially qualifying item is located to determine, in writing, whether or not the item is directly used in a high technology business or in an Internet advertising business. The proposed change in valuation would result in a reduction of roughly $210,000 per year in local government revenue. Additionally, the bill extends a Consumers Sales and Service Tax exemption for selected computer hardware and software to the tangible personal property to be installed into a building or facility for direct use in a high technology business or in an Internet advertising business. Due to the potential for broad application of the proposed Consumers Sales and Service Tax exemption, we are unable to accurately estimate the revenue impact related to the sales tax exemption. Additional administrative costs to the State Tax Department associated with this bill would be roughly $25,000. There would be no additional costs for local governments.



Memorandum






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