Fiscal Note - SB 0035 - Exempts Food From 3% of State Sales/Use Tax
L.R. NO. 0338-02
BILL NO. SB 35
SUBJECT: Taxation and Revenue-General; Taxation and Revenue-Sales and Use
TYPE: Updated
DATE: February 3, 1997
# Updated to reflect the updated response from the University of Missouri
Research Center.
#FISCAL SUMMARY
#ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue # ($153,377,259) # ($234,560,137) # ($239,251,080)
#Total Estimated
Net Effect on All
State Funds # ($153,377,259) # ($234,560,137) # ($239,251,080)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
#FISCAL ANALYSIS
ASSUMPTION
Officials of the Department of Revenue (DOR) state this proposal would exempt
only the General Revenue portion of the sales tax on retail sales of food.
"Food" includes only those products for which food stamps may be redeemed
under the federal food stamp program. The exemption only applies when food is
purchased from a retailer that is authorized to participate in the federal
food stamp program.
The Division of Taxation and Collection would request the following personnel
in order to implement this proposal:
2 Tax Processing Technician I's for 6 months initially to identify and
register affected accounts;
1 Tax Processing Technician I to handle taxpayer correspondence,
telephone inquiries and refund requests;
1 Tax Processing Technician I to process corrections, file maintenance
and taxpayer inquiries in the later stages of collection activity;
1 Data Entry Operator I for approximately 50% of the time to key the
additional locations that will be required to allow taxpayers to separately
account for food sales tax amounts, assuming 10,000 affected accounts or less
filing sales tax returns containing 10 additional fields per return on a
monthly basis. Forms revision costs to add additional lines to single
location voucher returns have been shown as well as postage costs.
The Information Systems Division state the effective date of October 1, 1997
may not allow sufficient time to perform the necessary programming changes;
therefore, overtime costs would be requested. State Data Center costs would
also be requested.
Oversight has allowed the Department of Revenue 2.5 FTE, forms revision and
postage costs, overtime costs requested and the State Data Center costs.
Officials of the Office of Administration (COA) assume the purpose of this
proposal is to eliminate the general revenue sales tax on food sold for
off-premise consumption. COA staff based their estimates on the following
assumptions:
1. Missouri food consumption based on Department of Commerce estimate of
"Personal Consumption Expenditure" data for U.S. It is assumed Missouri
accounts for about 1.9% of U.S. totals.
2. Food stamp purchases account for 6% of spending.
3. Consumer spending on food is assumed to grow 2% for Fiscal Years 1996
and beyond.
4. Effective date of October 1, 1997 results in one month lag in impact.
This gives eight months of fiscal impact in FY 98.
# The University of Missouri Research Center has updated their estimates to
concur with the estimates of the Office of Administration.
This proposal would result in a decrease in Total State Revenues since Sales
and Use Tax collections are included in the calculation of Total State
Revenue.
# FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(9 Mo.)
GENERAL REVENUE FUND
Cost to General Revenue Fund
Department of Revenue (DOR)
Personal Service (2.5 FTE) ($31,259) ($42,720) ($43,789)
Fringe Benefits ($8,918) ($12,188) ($12,493)
Expense and Equipment ($84,081) ($28,138) ($28,165)
Administrative Cost to DOR ($124,258) ($83,046) ($84,447)
# Loss to General Revenue Fund
General Revenue sales tax exemption
on food ($153,253,001) ($234,477,091) ($239,166,633)
#ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($153,377,259) ($234,560,137) ($239,251,080)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(9 Mo.)
0 0 0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that
they pay sales tax on taxable items. The businesses that are eligible to
accept food stamps would be able to sell their food exempt from sales tax
while those that are not eligible to participate in the food stamp program
would still be required to collect sales tax on food sales.
DESCRIPTION
This proposal sets the state sales tax rate at 1% for food bought at retail
establishments which are authorized as participants in the federal food stamp
program. "Food" is defined as articles which can be purchased with food
stamps. With the 1/8th of one percent conservation tax and the 1/10th of one
percent parks and soils tax, the state sales tax rate on food, beginning
October 1, 1997, would be 1.225%.
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
Office of Administration
University of Missouri Research Center
This Fiscal Note is not an official copy and should not be quoted or cited.