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, 2011.
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, 2011. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows:
Fiscal Year Change in Revenue
2012 -$19,400,000
2013 -$46,400,000
2014 -$27,700,000
2015 -$ 6,100,000
2016 -$ 800,000
Due to the proposed change effective for tax years beginning on or after July 1, 2011, additional administrative costs to the State Tax Department associated with this bill would be roughly $30,000 in both FY2011 and FY2012.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2011
Increase/Decrease
(use"-") |
2012
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
30,000 |
30,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
30,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
30,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-19,400,000 |
-19,400,000 |
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. 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, 2011. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows:
Fiscal Year Change in Revenue
2012 -$19,400,000
2013 -$46,400,000
2014 -$27,700,000
2015 -$ 6,100,000
2016 -$ 800,000
Due to the proposed change effective for tax years beginning on or after July 1, 2011, additional administrative costs to the State Tax Department associated with this bill would be roughly $30,000 in both FY2011 and FY2012. The additional costs would include mailing a notification to taxpayers of the tax rate change and the update of computer audit programs.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov