SB 0635 - Fiscal Note

Fiscal Note - SB 0635 - Removes Sales Tax Exemption For Coast Guard Documented Boats

L.R. NO.  2439-01
BILL NO.  SB 635
SUBJECT:  AMUSEMENT, LAW ENFORCE, TAXATION, SALES TAX
TYPE:     Original
DATE:     January 15, 1996



                              FISCAL SUMMARY


                    ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

Water Safety                       $0      $1,000,000     $1,000,000

General Revenue              $299,180      ($553,563)     ($508,919)

School District
Trust                        $345,983        $507,441       $558,185

Conservation                  $43,248         $63,430        $69,773

Parks & Soil                  $34,598         $50,744        $55,819

Total Estimated
Net Effect on All
State Funds                  $723,009      $1,068,052     $1,174,858

                   ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

None


Total Estimated
Net Effect on All
Federal Funds                      $0              $0             $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS

FUND AFFECTED                 FY 1997         FY 1998        FY 1999

Local Government             $513,784        $753,550       $828,905



                              FISCAL ANALYSIS

ASSUMPTION

Department of Revenue (DOR) officials report this proposal would remove the
sales tax exemption for watercraft vessels documented with the U.S. Coast
Guard, remove the in- lieu watercraft fee and mandate the transfer of $1
million from General Revenue to the "Water Safety Fund" beginning in FY 1998
and continuing for nine fiscal years. This transfer would be subject to
action by the General Assembly through the appropriations process.

The Information Systems Division would need to modify the Uniform Fee Office
System (UFOS) to remove the in-lieu watercraft fee. DOR would utilize the
services of one existing Programmer Analyst II to work 80% of the time for
approximately two weeks to make the minor modification.  DOR would request a
one-time appropriation of $5,209 for forms revision and misc. costs.

The Motor Vehicle Bureau reports $122,656,412 in taxable sales of documented
vessels for FY 95; however, this amount includes several gaming boat
transactions resulting in an unusual increase over previous years. After
adjusting for the gaming boat transactions, the figures still reflect an
extremely high increase over prior years which have been fairly consistent.
In an effort to make this estimate as accurate as possible, it has been
decided to use the FY 94 taxable sales figure, applying a growth rate of 15%
for FY 95 and 10% each year thereafter. In-lieu taxes collected in FY 95
totalled $814,048. A growth rate of 10% per annum was applied to this figure
also to estimate the revenue loss due to discontinuation of the tax.

Trade-in value is exempted from sales tax. According to estimates provided by
marine dealers, trade-ins comprise 30% of taxable sales. The estimate of gain
due to the imposition of sales tax on documented vessels was reduced by 30%.

Officials of the Missouri State Water Patrol report that this proposal would
not create additional costs for their agency


FISCAL IMPACT - State Government   FY 1997      FY 1998      FY 1999
                                   (9 Mo.)
.Income to Water Safety Fund
   Transfer from General Revenue        $0   $1,000,000   $1,000,000

ESTIMATED NET EFFECT TO
WATER SAFETY FUND                       $0   $1,000,000   $1,000,000

Income to General Revenue Fund
   Marine Sales tax             $1,037,948   $1,522,323   $1,674,556

   1% Collection fee                $5,190       $7,612       $8,373

Loss to General Revenue Fund
   In-lieu Watercraft fee       ($738,749) ($1,083,498) ($1,191,848)

Cost to General Revenue Fund
   Department of Revenue
   Expense & Equipment            ($5,209)           $0           $0

  Transfer to Water Safety Fund         $0 ($1,000,000) ($1,000,000)

ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND              $299,180   ($553,563)   ($508,919)

Income to School District Trust Fund
   Marine Sales Tax               $345,983     $507,441     $558,185

Income to Conservation Fund
   Marine Sales Tax                $43,248      $63,430      $69,773

Income to Parks & Soil Fund
   Marine Sales Tax                $34,598      $50,744      $55,819


FISCAL IMPACT  - Local Government  FY 1997      FY 1998      FY 1999
                                   (9 Mo.)

Income to Cities
  Marine Sales Tax                $342,523     $502,367     $552,603

Income to Counties
  Marine Sales Tax                $171,261     $251,183     $276,302

ESTIMATED NET EFFECT TO
LOCAL FUND                        $513,784     $753,550     $828,905

DESCRIPTION

This proposal would remove the "in-lieu watercraft fee" for vessels
documented with the United States Coast Guard and subject those vessels to
sales tax. This proposal would also create the "Water Safety Fund" and
mandate the transfer of $1 million from General Revenue beginning in FY 98
and continuing for nine fiscal years.

This proposal has an effective date of October 1, 1996.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.

SOURCES OF INFORMATION

Missouri State Water Patrol
Department of Revenue