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| SPONSOR: | Altamirano | DATE TYPED: | 02/12/99 | HB | |||
| SHORT TITLE: | Resource Excise Tax on Copper | SB | 337 | ||||
| ANALYST: | Taylor | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY99 | FY2000 | |||
| N.A. | $ (1,500.0) | $ (1,500.0) | Recurring | General Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates/Conflicts with/Companion to/Relates to
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
Senate Bill 337 would change the rate of the resources taxes and the processors tax on copper. The resources tax on copper would be lowered from three-fourths of one percent of taxable value to one-fourth of one percent. The processors tax rate would also be reduced from three-fourths of one percent of taxable value to one-fourth of one percent. The rate reductions would become effective July 1, 1999, the beginning of FY 2000. The reduced rates would sunset on July 1, 2002, the beginning of FY 2003.
FISCAL IMPLICATIONS
According to TRD, the revenue loss associated with this bill is approximately $1.5 million. This estimate is based on the assumption that current copper prices of $.65 per pound hold steady over the next few years. At the $.65 per pound price, the three-fourths of one percent tax would raise $2.4 million, but at the lower rate, the tax would raise about $.8 million-a difference of $1.5 million. The estimated loss would be lower if copper prices fell below $.65 or higher if they rose above that benchmark.
ADMINISTRATIVE IMPLICATIONS
TRD reports relatively minor administrative impacts. They say that much of the computer software used to compute severance resource taxes will need to be updated to solve Y2K problems, anyway. The incremental cost required by the proposed changes would be about $26 thousand.
SUBSTANTIVE ISSUES
Copper prices have fallen dramatically in the past three years. Prices hovered around $1.35 per pound in 1995, but have since plummeted, reaching a nadir of just over $.60 per pound in late 1998. The weakness in copper prices, like other weak commodity prices, can be attributed to a weak world economy and thus weak demand outside the United States and western Europe.
BT/njw