R EVENUE E STIMATE $ Presented to the HRTPO Legislative Ad-Hoc - - PowerPoint PPT Presentation

201 2012 2 REGI EGI ON ONAL AL FOR FORECA ECAST ST

REVENUE ESTIMATE$

Hampton Roads Transportation Planning Organization

Greg Grootendorst Chief Economist, HRPDC September 25, 2015

Presented to the HRTPO Legislative Ad-Hoc Committee

• Amusement taxes
• Hotel Excise Tax
• Restaurant/Prepared Food Tax
• Sin Taxes (Alcohol & Tobacco)
• Tax on Marine Vessels
• Tax on personal watercraft
• Marine facilities tax
• Marine fuels tax
• Real estate transfer tax
• Insurance premium taxes
• Fertilizer/Pesticide taxes (Agricultural Chemicals)
• Disposal tax surcharge
• Litter control tax
• Airport use excise tax
• Energy & Utilities taxes
• Dedicated value added taxes
• Improvement district tax
• Special taxing districts
• Building permit tax
• Head tax (based on # of employees)
• Vehicle Titling Tax
• Rental car taxes
• Car Tax
• Mortgage Transaction fee
• Recordation Fee
• Project investment fee
• Access rights fee
• Connection fee
• Fees on Cable & High Speed Internet Utility rights application fee
• Well permit/pumping fee
• Car Registration Fees
• Vehicle registration fee for public colleges/universities
• Vehicle use fees based on mileage (payable w/ state inspection)
• Fees for Trucks Servicing the Port
• Transportation/Infrastructure fee for non-profits/governmental
• rganizations whose property is not subject to property taxes
• Off and/or on-street parking space fee
• Inspection/Monitoring/Testing fee
• Licensing and Recreational fee
• Local Aquifer Protection fee
• Local Water/Wastewater Utility user fee
• Use of permitting fees
• Septic system impact fee
• Solid waste disposal fee (Tipping Fees, Septage/Sludge Fees)
• State public water supply withdrawal fee
• Bicycle registration fee
• Traffic violation revenues - percentage
• Lottery and/or Casino Revenue / Dedicated Lottery
• Container Truck Surcharge
• Impact Fees / Proffers for new development
• Tourist tolls on roadways as part of toll system
• Leasing of air space and right-of-way
• Road branding / providing advertising space on public facilities
• Development of public-private partnerships
• Tolls
• Construction fee
• Franchise fee

Examples of Potential Transportation Revenues

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Motor Fuels Tax in VA

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State Gas Taxes

Date Gasoline Diesel

Prior to 7/1/2013 17.5 ¢ per gallon 17.5 ¢ per gallon 7/1/13 - 12/31/14 3.5% of

Wholesale

= 11.1 ¢ per gal.

6% of

Wholesale

= 20.2 ¢ per gal.

Price* Price*

1/1/15 to present 5.1% of

Wholesale

= 16.2 ¢ per gal.

6% of

Wholesale

= 20.2 ¢ per gal.

Price* Price*

* The sales tax on fuel is applied to the statewide average wholesale price as determined by the DMV Commissioner. In the event that the average price falls below the price floor set in February of 2013, then the tax rate will be applied to the floor price

• f $3.17 for gasoline and $3.36 for diesel. Since the inception of the state motor fuels sales tax in July of 2013, sales taxes

have been applied to floor prices, as average fuel prices have remained below the floor price.

If Hampton Roads’ 2.1% Motor Fuels Tax had the VA Code Floor Prices

Source: Virginia Department of Taxation and HRPDC

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State Floor

$3.17 – Gas $3.36 – Diesel

As of 9/22/15

$1.51 – Gas $1.45 – Diesel

Revenue from Current Law Revenue with VA Floor Price Increase in Revenue 2015 38.6 $ 44.9 $ 6.3 $ 2016 28.2 $ 45.8 $ 17.6 $ 2017 28.6 $ 46.2 $ 17.7 $ 2018 29.5 $ 46.8 $ 17.4 $ 2019 30.0 $ 47.7 $ 17.7 $ 2020 30.5 $ 48.2 $ 17.8 $ 2021 31.2 $ 48.9 $ 17.8 $ 2022 32.2 $ 49.6 $ 17.4 $

Fiscal Year

Millions of Dollars

There is a 6% Sales Tax in Hampton Roads

Where does that money go?

0% 1% 2% 3% 4% 5% 6%

2.5% Base sales tax plus taxes on food for home consumption 1% - Local option sales tax returned to locality 1% - K-12 Education returned to localities based on school aged population 0.5% - Transportation Trust Fund 0.15% - Diversion from GF to Transportation HMOF 0.7% - Hampton Roads Transportation Fund revenues 0.3% - Transportation HMOF 0.25% - K-12 Education 0.125% - Property tax relief fund 1.975% - General fund revenues 1.65% Sales taxes dedicated to transportation

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Estimates* of Sales and Use Tax Exemptions

Total State and Local Sales Taxes Collected in FY2014 Estimated Value of Exemptions in FY2014 Estimated Taxable Sales if All Exemptions Removed 1% of Taxable Sales with No Exemptions $5,273.3 (M) $23,633.3 (M) $555,391.2 (M) $5,553.9 (M) 1% Local Option Revenues in HRTPO Jurisdictions Estimated 1% HRTPO Sales Tax Revenues with No Exemptions $208.8 (M) $1,032.1 (M)

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*Estimates derived from the Evaluation of Virginia’s Sales Tax Exemptions study produced by Chmura Economics & Analytics in 2011

Taxable Sales Estimates* by Exemption Category in 2014

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000

Media Nonprofit Agricultural Other Commercial and Industrial Commodity and Governmental Miscealleous Service Millions of Dollars

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*Estimates derived from the Evaluation of Virginia’s Sales Tax Exemptions study produced by Chmura Economics & Analytics in 2011

Estimate* for 2014 Taxable Sales of the Top 50 Sales Tax Exemptions in VA

(In millions of dollars)

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1 Professional, Insurance, and Personal Service 267,698.1 $ 2 Goods Delivered Outside the Commonwealth 95,320.1 $ 3 Motor Vehicles 20,852.8 $ 4 Manufacturing Exemption 12,565.5 $ 5 Gas, Electricity, Water 10,319.2 $ 6 Prescription Drugs 9,860.9 $ 7 Fuel 9,591.8 $ 8 Food for Home Consumption 8,426.4 $ 9 Publications of Newspapers and Periodicals 2,339.8 $ 10 Advertising 2,330.7 $ 11 Labor and Service for Remodeling Property 1,226.9 $ 12 Nonprofit Exemptions 1,197.3 $ 13 Political Divisions 1,190.4 $ 14 Poultry and Animal 1,090.1 $ 15 Accomodation more than 90 Days 750.3 $ 16 Propane, Gas, Coal, Oil for Domestic Consumption 702.4 $ 17 Nonprescription Drugs 636.3 $ 18 Inputs in Agricultural Production 542.8 $ 19 School Lunch/Textbooks 522.2 $ 20 Food Stamps 440.1 $ 21 Purchase by Contractor 419.6 $ 22 Meal to Restaurant Employees 405.9 $ 23 Catalog and Brochures 317.0 $ 24 Seeds, Crops, Plants 262.3 $ 25 Drugs Used by Hospitals, etc. 262.3 $ 26 Research & Development 214.4 $ 27 Railway 205.2 $ 28 Goods for Future Lease/Rent 198.4 $ 29 Drugs Used by Doctors Offices 177.9 $ 30 Airline 157.4 $ 31 Inputs in Feed Production 109.5 $ 32 Goods Used by Nuclear Power Plants 82.1 $ 33 Multi-fuel Heating Stove 82.1 $ 34 Leasing of Audio/Video Tapes 79.8 $ 35 School Holiday 63.9 $ 36 Data Center 59.3 $ 37 Medical Equipment and Supplies 52.5 $ 38 Railroad Rolling Stock 43.3 $ 39 Shipping 38.8 $ 40 Natural Gas Extraction and Processing 38.8 $ 41 Hurricane Equipment 38.8 $ 42 Broadcast Equipment 25.1 $ 43 Energy Star 22.8 $ 44 Handicapped Equipment 20.5 $ 45 Drugs Used by Veternarians 18.2 $ 46 Taxable Medical Supply 18.2 $ 47 Canteen Sales at Veterans Affairs 6.8 $ 48 Textile Product Leasing 6.8 $ 49 Modular Building 6.8 $ 50 Taxicab Driver 4.6 $ *Estimates derived from the Evaluation of Virginia’s Sales Tax Exemptions study produced by Chmura Economics & Analytics in 2011

Previously Discussed Revenue Strategies

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Local sales & use tax of 1% (levied according to existing local option) 213,159,000 $ Local income tax of one-half of one percent (0.5%) 142,757,000 $ Add 1% to the motor vehicle sales & use tax 34,662,000 $ Tax increase of 5¢-per-gallon on motor vehicle fuels 33,269,000 $ Cigarette tax of 50¢ per pack 32,566,000 $ Charge of $10 per container on container traffic through the ports 20,524,000 $ Increase of 1¢ per $100 of Assessed Value of Real Estate 16,157,000 $ Vehicle Registration Fee of $10 per vehicle 14,800,000 $ Add 1% to the hotel and motels room tax 8,326,000 $ Recordation tax of 1¢ per $100 of assessed value 3,689,000 $ Building permit tax of 10¢ per $100 of assessed value 979,000 $ Building permit flat fee of $100 609,000 $

Alternate Revenue Generation Scenarios

Strategy Estimated Revenue

Greg Grootendorst HRPDC Chief Economist ggrootendorst@hrpdcva.gov

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• Equity and Fairness. Similarly situated taxpayers should be taxed similarly.
• Certainty. The tax rules should clearly specify when the tax is to be paid, how it is to be paid, and how

the amount to be paid is to be determined.

• Convenience of Payment. A tax should be due at a time or in a manner that is most likely to be

convenient for the taxpayer.

• Economy in Collection. The costs to collect a tax should be kept to a minimum for both the

government and taxpayers.

• Simplicity. The tax law should be simple so that taxpayers understand the rules and can comply with

them correctly and in a cost-efficient manner.

• Neutrality. The effect of the tax law on a taxpayer’s decisions as to how to carry out a particular

transaction or whether to engage in a transaction should be kept to a minimum.

• Economic Growth and Efficiency. The tax system should not impede or reduce the productive capacity
• f the economy.
• Transparency and Visibility. Taxpayers should know that a tax exists and how and when it is imposed

upon them and others.

• Minimum Tax Gap. A tax should be structured to minimize noncompliance.
• Appropriate Government Revenues. The tax system should enable the government to determine how

much tax revenue will likely be collected and when.

Principles of Good Tax Policy

Source: American Institute of Certified Public Accountants

Revenue Estimates – HRTPO – Legislative Ad-Hoc