Fireworks sales in West Virginia continue to be a dud, the 2019 edition of the Fireworks Safety Fee Report shows.
In calendar year 2018, the 12 percent fireworks safety fee brought in $643,981, a 9.3 percent decline from 2017, the report prepared by the state Tax Department finds.
Add in the 6 percent sales tax, and fireworks sales generated a total of $965,971 in tax revenue in 2018 — about one-third of the $2.8 million of annual revenue that the department projected when the Legislature legalized the sale of fireworks in West Virginia in 2016.
The report blames the state’s uncompetitively high tax rates for the sluggish sales, noting that neighboring states of Ohio and Kentucky collect sales taxes only on fireworks purchases.
“Compared to an effective rate of between 18 and 19 percent in West Virginia — inclusive of the 12 percent fireworks safety fee, 6 percent state sales tax, and up to 1 percent municipal sales tax where applicable — the weight of the West Virginia tax is undoubtedly impacting consumer behavior for this commodity,” the report states.
The report also notes that fireworks retailers in nearby states have permanent locations, open year-round, as opposed to the seasonal, transient operators in West Virginia.
It suggests that the combination of lower prices and an established customer base allows out-of-state retailers to draw West Virginians across state lines for fireworks purchases.
The report does not address the impact of municipalities around the state that passed ordinances restricting fireworks usage in the summer and fall of 2016, following widespread complaints about fireworks set off around the July Fourth holiday that year.
Many of the ordinances are similar to an ordinance enacted in Charleston, which allows people to set off fireworks only on four holidays — New Year’s Day, Memorial Day, Fourth of July, and Labor Day — and only between the hours of 11 a.m. and 11 p.m.
Other cities, such as Morgantown, had ordinances prohibiting the use of fireworks within city limits on the books prior to the 2016 legislation.
Since fireworks were legalized effective July 1, 2016, state fireworks sales have trended downward, the report finds.
In the six months of sales in 2016, the fireworks safety fee brought in $754,553. In the first full year of fireworks sales in 2017, that revenue dropped to $709,936, a decline of 5.9 percent, and the decline in sales accelerated in 2018.
In the first 30 months since fireworks were legalized, the fireworks safety fee has raised a total of $2.1 million — 75 percent of which goes to state veterans’ nursing homes, and 25 percent to volunteer fire departments around the state.
That’s far below the $4.725 million that the Tax Department projected the fee would raise in its first 30 months in the fiscal note provided for the bill legalizing fireworks sales in 2016.