Interim committee meets here

Wednesday and Thursday of last week, the Joint Revenue Interim Committee, chaired by Senator Ray Peterson and Representative Michael Madden, came to Thermopolis to meet and discuss revenue options available. The joint committee is tasked with looking at various revenue options for the state.

Among the topics of discussion were the markups and taxes related to beer, wine, liquor and cigarettes, wind energy production taxes and gross receipts tax. With each topic, several people testified whether they were for or against particular items, and their reasons why.

House District 28 Representative Nathan Winters was in attendance during the first day of the session, interested particularly in the gross receipts tax. These sessions, Winters explained, are more for bill proposals and information gathering rather than concrete, final solutions. Those, he noted, happen closer to the end of the year, yet these public meetings are an interesting part of the process.

With regard to the gross receipts tax, Winters said it could be very damaging as it, essentially, creates a “tax pyramid” in which all steps of production are taxed. Whether there is a profit or not, or even if there is a loss, he said, there is a climb in cost which consumers will see but may not understand.

In other states, Winters said, as a result of being taxed at every step of production, it’s been found a lot of companies start to vertically integrate rather than having a healthy relationship among companies where they can collaborate.

With the gross receipts tax, everything would be taxed whether it be minerals, medical supplies or any other items produced in communities across the state. Take for instance the oil fields, he said. There has to be a certain price per barrel of oil. If the gross receipts tax were to cut into that, it would mean the shutting down of more wells. Essentially, an attempt to increase revenue winds up decreasing it instead.

Tax is one area where we have to be cautious, Winters said, as typically when taxation goes up production goes down.

With regard to the markups on wine and spirits, information presented by Thomas J. Montoya, the State of Wyoming Department of Revenue, Liquor Division chief of enforcement showed there is a 17.6 percent markup on spirits and wine. However, a motion was passed by the committee to draft legislation that could cause that rate to increase up to 20.6 percent.

It was also noted during the discussion that several fees related to alcohol sales, such as wholesale licenses, microbrewery permits and transportation licenses had not been updated in several years. The wholesale license fee, for instance, has not changed since 1935.

To break it down, should the bill pass, it would result in increases of up to: $0.25 per bottle for low end vodka, $0.39 per bottle for mid range whiskey and $1.73 for high end scotch. As for wine, there would be increases of $0.25 per bottle for low end, $0.62 per bottle for mid range and $1.05 per bottle for high end.

As of Jan. 1, the current tax on beer is two cents per gallon, which is well below the 20 cents per gallon median national rate. Wyoming also has the lowest beer tax of all 50 states as of Jan. 1, with the next closest being Wisconsin and Missouri at six cents. It was suggested a bill be drafted to bring that rate up to 18 cents.

Senator Dave Kinskey also suggested the bill for increasing the tax on wine and spirits include a stipulation that one penny per bottle of liquor sold go to drug and alcohol prevention efforts; such efforts saw drastic cuts this year.

Any action on tobacco and cigarette taxes was tabled. However, prior to that decision, it was suggested the tax be increased by possibly 10 cents, 50 cents or even $1 cents per pack. The 10 cent increase would generate an additional $2.8 million, the 50 cent increase would bring in an additional $14.37 million and the $1 increase would generate $26.5 million. The current rate is 60 cents per pack of 20 cigarettes and 75 cents per pack of 25.

As for moist snuff, which is in a category of its own, the suggestion was to increase the tax 30 cents per ounce, which would generate $2.3 million.

Of course, there were the usual arguments regarding tobacco use, such as health concerns, and those advocating that increasing taxes on tobacco products would not be an effective way to increase revenue, as regular users might quit using the products altogether or travel over state lines to purchase them.

This concern of travelling to purchase tobacco is one that also impacts Wind River Indian Reservation. Residents of the Reservation can buy non-taxed cigarettes, and people can travel to the Reservation and buy cigarettes. Those travelers, however, are sold taxed cigarettes. The issues caused by this arrangement could potentially increase along with the taxes, unless any drafted bill has stipulations regarding the Reservation and its cigarette sales.

There was also concern expressed regarding the possibility of a tobacco “black market,” with people smuggling cigarettes and other tobacco products across state or Reservation lines.

Another subject which did not reach a formal conclusion was in regard to wind energy production taxes. Though expected to be an item of little discussion, the amount of public comment received was astounding. Some advocated for higher taxes and increased numbers of turbines, in essence taking advantage of the high winds in the state to generate power which would be sold to other states and companies.

Others were of the mind that we should not be pillaging and exploiting natural resources such as wind energy for the sake of a few extra dollars.

There was a proposal to have a definitive answer with regard to the wind energy taxes, to help put to bed any uncertainties companies might have when it comes to investing in Wyoming wind energy; a resounding “no” from the majority of committee members quickly shot that motion down.

Keep in mind there is still a long way to go before any bills proposed by the committee before they become law. The committee’s next meeting is scheduled for Sept. 12 and 13 in Buffalo.