SB 0981 - Fiscal Note

Fiscal Note - SB 0981 - Certain Transactions To Be Exempt From Additional Use Tax

L.R. NO.  3627-15
BILL NO.  SS for SB 981 with HCA 1, 2 and 3
SUBJECT:  Business; Taxation; Sales Tax
TYPE:     Original
DATE:     May 6, 1996



                              FISCAL SUMMARY

                    ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED               FY 1997         FY 1998         FY 1999

General Revenue           ($83,547)       ($67,852)       ($69,509)

Partial Estimated
Net Effect on All
State Funds               ($83,547)       ($67,852)       ($69,509)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED               FY 1997         FY 1998         FY 1999


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            unknown         unknown         unknown


                              FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Revenue (DOR) assume this proposal would
remove the local use tax state that was recently ruled unconstitutional and
replace it with a local option use tax. Elections are authorized prior to
August 7, 1996 and after December 31, 1996. For those political subdivisions
imposing the tax at the election August 6, 1996, local use tax collection
would begin October 1, 1996. Department of Revenue officials state they would
need a total of 8.2 FTE to implement the provisions contained in this
proposal.  They assume 30,500 accounts would be affected for which they would
perform registration, key entry, file maintenance, and taxpayer problem
resolution duties.

Oversight assumes the local use tax would only be collected within cities
and/or counties that adopt the tax  at a rate equal to their current sales
tax rate. The rate would be adjusted when the sales tax rate is adjusted.
Distribution of the proceeds would be made to the city or county levying the
tax. All cities except those in St. Louis County would be able to impose the
tax. In St. Louis County, the tax would be imposed by the County and
authorization would be given to cities within the County to enact a local use
tax equal to any capital improvements sales tax they have adopted. St. Louis
City would also be able to enact the tax which would include the capital
improvements and transportation sales tax rates.

Oversight would assume the Department of Revenue (DOR) would require two Tax
Audit Analyst I's and one Data Entry Operator I and the appropriate expense
and equipment with State Data Center costs in order to implement this
proposal. Oversight assumes that local use tax collection would begin October
1, 1996 and therefore has allowed $2,500 in overtime funds since this
proposal may not allow time for the hiring of full-time employees.

Oversight cannot estimate the loss to the Local Use Tax Fund for exempting
aviation jet fuel from local use tax, since the amount of such qualifying
purchases is unknown and future local use tax rates are unknown.

Oversight assumes that the revenue impact of this proposal on local
governments is unknown as it would depend on the number of political
subdivisions that impose the local option use tax and at what rate.


FISCAL IMPACT - State Government       FY 1997     FY 1998     FY 1999

Income to General Revenue Fund
   1% Collection Fee                   unknown     unknown     unknown

Cost to General Revenue Fund
  Department of Revenue
  Personal Service (3 FTE)           ($23,700)   ($48,585)   ($49,800)
  Fringe Benefits                     ($7,285)   ($14,935)   ($15,308)
  Expense and Equipment              ($52,562)    ($4,332)    ($4,401)

Administrative Cost to DOR           ($83,547)   ($67,852)   ($69,509)

PARTIAL ESTIMATED NET EFFECT
TO GENERAL REVENUE FUND              ($83,547)   ($67,852)   ($69,509)


FISCAL IMPACT  - Local Government      FY 1997     FY 1998     FY 1999

Income to Political Subdivisions
   Local Use Tax Collections           unknown     unknown     unknown

Loss to Local Use Tax Fund
   Jet Fuel Use Tax Exemption        (unknown)   (unknown)   (unknown)


DESCRIPTION

On March 26, 1996 the Missouri Supreme Court held Section 144.748, RSMo, the
local use tax, to be unconstitutional. This proposal would  allow certain
political subdivisions to impose a local use tax if a local sales tax is
imposed as defined in section 32.085, RSMo, at a rate equal to or less than
the rate of the local sales tax.

Currently the expiration of the local use tax exemption (section 144.748
RSMo) on aviation jet fuel will expire on January 1, 1997. This proposal
would permanently extend the local use tax exemption for aviation jet fuel
stored, used or consumed at federal grant airports.

This proposal contains an emergency clause and would be in full effect upon
passage and approval.

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

Department of Revenue