This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0731 - Exempts items from sales/use tax, including livestock or poultry feed, electrodes and pesticides or herbicides
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3164-05
BILL NO. SCS for SB 731, 714, 715, 513, 691, 857, 887, 516, 667, 491, 654, 590 and 873
TYPE: Original
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS Net Effect on All State Funds* *The unknown revenue losses due to the various additional sales and use tax exemptions are not
reflected in the partial net effect to State funds. Such amounts are expected to be significant, in excess
of $1,000,000 annually. Numbers within parentheses: ( ) indicate costs or losses This fiscal note contains 18 pages. ESTIMATED NET EFFECT ON FEDERAL FUNDS Net Effect on All Federal Funds
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue
($19,593,844) to
($19,812,184)
($49,490,282) to
($49,752,290)
($49,622,364) to
($49,884,372) Outstanding Schools Trust
$0
($18,629,887)
($19,002,485) Aviation Trust
$3,740,000
$4,760,000
$5,050,000 School District Trust
($1,768,991) to
($1,841,771)
($2,765,455) to
($2,852,791)
($2,889,220) to
($2,976,556) Conservation
($104,875) to ($113,972)
($196,932) to ($207,849)
($203,653) to ($214,570) Parks and Soil
($83,899) to ($91,177)
($157,546) to ($166,279)
($162,923) to ($171,656) Highway
(unknown)
(unknown)
(unknown) Partial Estimated
($17,811,609) to
($18,119,104)
($66,480,102) to
($66,849,096)
($66,830,645) to
($67,199,639)
FUND AFFECTED
FY 1999
FY 2000
FY 2001 None
Total Estimated
$0
$0
$0
|
PARTIAL ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Local Government* | ($1,258,486) to ($1,367,656) | ($2,363,184) to ($2,494,187) | ($2,443,830) to ($2,574,833) |
*The unknown revenue losses due to the various additional sales and use tax exemptions and losses to the Outstanding Schools Trust Fund are not reflected in the partial net effect to local funds.
FISCAL ANALYSIS
ASSUMPTION
SECTION 135.313-INCOME TAX CREDIT FOR CHARCOAL PRODUCERS
The Department of Economic Development (DED) state they have no estimate as to the number of equipment manufacturers located in Missouri that would qualify and claim the credit or assign it to a third party. The number of charcoal producers that would purchase the equipment is also indeterminable. The cost of the equipment is also an unknown so determining the impact of the 50% credit is not possible. The Harris Directory lists 15 charcoal producers in the state of Missouri. Application for approval of a credit goes to the Department of Natural Resources. DED and the Department of Natural Resources certify to DOR that the best available equipment was produced or purchased. DED officials state that this portion of the proposal would not fiscally impact their agency.
The Department of Natural Resources (DNR) state there are approximately 25 charcoal producers in Missouri that would be eligible for the tax credit if they added department approved best available control technology equipment to their facilities. The department assumes that it would be able to review the sales tax credit applications with existing resources. If the number of applications exceeds expectations DNR would request additional resources.
ASSUMPTION (continued)
Per an agreement with industry, the DNR, and the U.S. EPA, these facilities will be responsible for installing emission control devices. Installation of these emission control devices is estimated to extend over eight calendar years, beginning in calendar year 1998 and extending through calendar year 2005.
The department assumes a total of 286 charcoal kilns will require these emission control devices. These charcoal kilns are located at 23 separate locations. The department assumes that wherever possible, two charcoal kilns will be controlled by one emission control device. Therefore, the department assumes that of the 286 charcoal kilns at 23 separate locations, 29 are estimated to be controlled by one emission control device. Over the eight years, the department estimates that approximately 158 emission control devices would be installed at these facilities.
The capital equipment cost for each emission control device is estimated to be approximately $47,414 based on the Missouri Charcoal Industry Best Available Control Technology (BACT) analysis provided by the charcoal kiln industry. Therefore, the total capital equipment cost for these emission control devices would be approximately $7,491,412.
The income tax credit provided in this legislation is equal to 50% of the purchase price or manufacturer's cost of this equipment. Therefore, the department assumes the resulting income tax credit would be approximately $3,745,706.
Since this installation is estimated to extend over eight calendar years, the department assumes the following schedule and corresponding tax reductions:
* 26 emission control devices installed in calendar year 1998 (FY99) and 26 in calendar year 1999 (FY2000) resulting in a tax credit of approximately $616,382 (26 emission control devices x $47,414 cost x 50% tax credit) for each fiscal year ,
* 22 in calendar year 2000 (FY2001) resulting in a tax credit of approximately $521,554 (22 x $47,414 x 50%),
* and the remaining 84 in the out-years resulting in a tax credit of approximately $1,991,388 (84 x $47,414 x 50%).
SECTIONS 143.111, 143.122 and 143.171.6-TUITION INCOME TAX DEDUCTION
Officials of the Department of Revenue (DOR) state this portion of the proposal allows individuals and corporations a tax deduction of up to $2,500 per student for expenses paid to
ASSUMPTION (continued)
others on behalf of students in grades 9 through 12, including tuition, transportation, attendance fees and school supplies. Effective January 1, 1999.
The Division of Taxation states there are 108,000 students that pay tuition in schools in Missouri. Of the 108,000 students DOR is uncertain how many fall within one family or how many are in grades nine through twelve which are qualifications for the deduction. DOR assumes that at least 50,000 taxpayers will claim this deduction and therefore request 4 Tax Collection Technician I positions to address this additional workload. The Division of Taxation would also request one Data Entry Operator II for a 4 month period to address this task.
Oversight assumes that the tax deduction would be a modification to the Missouri Income Tax Return and that DOR could handle this proposal with their current resources.
Officials of the Department of Elementary and Secondary Education (DES) state this proposal would not fiscally impact their agency or school districts.
Officials of the Office of Administration (COA) state this proposal would allow a small business or individual a $2,500 deduction for paying the tuition or school expenses for a secondary school student.
COA staff state there are 26,258 students in private secondary schools in Missouri. The average tuition for private secondary schools is $4,578 as stated in table 271 of the 1997 Statistical Abstract. Therefore, it is assumed that all of these students would take the full $2,500 deduction. There are 255,397 students in public secondary schools in Missouri. It is assumed that these students have school and transportation expenses of $250 annually. A 6% marginal tax rate was assumed. The estimate is the maximum cost, and there is no way to break down how much would come from individual or corporate taxpayers. COA staff assume that taxpayers would not adjust their withholdings in FY99 to take advantage of this new deduction.
SECTION 143.161-INCREASE IN INCOME TAX DEPENDENCY EXEMPTION
Officials of the Department of Revenue (DOR) state this proposal raises the income tax dependency deduction from $400 to $800. DOR staff state this proposal would not fiscally impact their agency.
Officials of the Office of Administration (COA) state this proposal increases the dependency deduction to $800 after January 1, 1999.
ASSUMPTION (continued)
COA staff have assumed that this proposal would have an estimated impact of approximately $0 in FY99, ($32,807,878) in FY2000 and ($32,873,494) in FY2001. COA staff assume that taxpayers would not adjust their withholdings in FY99 to take advantage of the increased dependent deduction. The estimate is based on State of Missouri Individual Income Tax data, data from the Tax Expenditure Report, and population projections from the State Demographer.
Oversight estimates a loss to General Revenue of $13,642,664 for FY99 due to the possibility of reduced withholding and estimated income tax payments for salaries and wages received after January 1, 1999. Oversight assumes the Department of Revenue would be required to adjust withholding tables, and has reflected five months of calendar year 1999 as the revenue loss for FY99. Oversight has reflected the revenue loss for this proposal assuming 100% of taxpayers would adjust payments, however, it should be noted that this amount could be less, depending on taxpayers' awareness of the increase in the dependency deduction and their desire to adjust tax withholdings or estimated payments.
Oversight has not estimated or included a potential loss to the General Revenue Fund for the effects of taxpayers' corresponding increase in federal income taxes which in turn would result in a slight reduction to income taxes paid to the State of Missouri. Factors which would influence this amount include the ability of the taxpayer to itemize deductions, the income level of the taxpayer and the limitation of the federal income tax deduction on the Missouri return.
SECTION 143.171.4-FEDERAL TAX DEDUCTION FOR CORPORATE TAXPAYERS
Officials of the Department of Revenue (DOR) state this portion of the proposal would increase the percentage of federal income tax liability that may be deducted for corporations from 50% to 75% for tax years beginning on or after September 1, 1998.
Officials of the Office of Administration (COA) state this portion of the proposal increases the deductibility for federal income tax paid for corporations. The revenue reduction from this portion of the proposal would be $0 in FY99, ($18,629,887) in FY2000 and ($19,002,485) for FY2001. These estimates are from the FY99 Consensus Revenue Forecast and Budget and Planning's Corporate Income Tax Simulator. The revenue reductions from this proposal would require an equivalent amount of General Revenue in order to fully fund the Foundation Formula. COA staff assume that taxpayers would not adjust their withholdings in FY99 to take advantage of this deduction.
Oversight will reflect the impact of this portion of the proposal as a loss to the Outstanding Schools Trust Fund.
ASSUMPTION (continued)
SECTION 144.030-SALES/USE TAX EXEMPTIONS
Officials of the Department of Natural Resources and the Office of Administration state the revenue impact of this proposal is unknown.
Officials of the Department of Revenue (DOR) assume this proposal makes the following changes:
Livestock and Poultry Feed
The limitation that livestock or poultry feed must be used in feeding of livestock and poultry to be sold ultimately at retail is removed. Livestock and poultry feed is exempted whether or not the livestock or poultry is to be sold at retail. Currently, such feed is only exempt when the livestock or poultry is ultimately sold in processed form or otherwise at retail. This would allow the feed exemption for pleasure animals such as horses.
Oversight assumes the proposal would primarily exempt sales of horse feed, although some other animal feed may become exempt as well. The Department of Agriculture reported that in 1995 manufacturers shipped 34,010 tons of complete horse feed and 4,266 tons of supplemental horse feed within or into Missouri for sale within the state, for a total of 38,276 tons. A large Missouri manufacturer/distributor stated that an average retail value of the feed would be $280 to $300 per ton. Oversight calculated total retail sales of horse feed to be approximately $11,482,800. This figure would not include custom mixed feed, oats, and other miscellaneous livestock feed but would represent the majority of feed which would gain tax exemption.
Newspaper Items
Ink, computers, photosensitive paper and film, toner, printing plates and other machinery and equipment, replacement parts and supplies used in producing newspapers are exempted.
Oversight assumes this portion of the proposal would codify in statute that which is currently in practice. Therefore this portion of the proposal, with the exception of replacement parts, would not fiscally impact any state or local sales and use tax fund.
Medical Assistive Devices
Exempts wheelchairs, stairway lifts, braille writers, and electronic braille equipment. Also exempts the sale of other items when purchased on behalf of a person with disabilities to allow them to function more independently, including modifications to motor vehicles to permit the use of the vehicles by such individuals.
ASSUMPTION (continued)
While data is not available to accurately estimate total affected sales Oversight assumes, based on information gathered from industry, that the revenue loss as a result of this portion of the proposal would range between $500,000 and $1,000,000 annually.
Adjuvants
The exemption for pesticides is expanded to include adjuvants such as crop oils, surfactants, wetting agents and "other assorted pesticide carriers" used to improve or enhance the effect of pesticides and foam markers used in the application of pesticides.
A large Missouri manufacturer/distributor stated that their taxable sales for 1997 from adjuvants were $923,000. This manufacturer claims to makes up approximately 30% of the market for adjuvants in the state of Missouri, Oversight assumes that the total revenue loss as a result of this portion of the proposal would be $167,000 annually. The state portion of the loss would be approximately $130,000 annually.
SECTION 144.030-Additional Sales and Use Tax Exemptions not reflected
Items Consumed in the Manufacture of Glass
Materials that are ultimately consumed in the manufacture of glass by blending, reacting or
interaction with or by becoming an ingredient or component part of glass are exempted.
Replacement Parts
Replacement parts are included in the exemption of materials and supplies used in new plant and plant expansion.
EEDP Exemption
Electrical Energy Direct Pay (EEDP) authorization is expanded to include recyclers. The 10% limitation is not a criteria if the raw materials used in processing contain at least 25% recycled materials.
Electrodes
Electrodes are added to the anode exemption when used in manufacturing and when they have a useful life of less than one year.
Pesticides and Herbicides
Exempts pesticides and herbicides used in the production of crops, livestock or poultry. Removes the limitation that the crops, livestock or poultry must be "for food or fiber".
Lubricants for Farm Machinery and Equipment
Lubricants used in farm machinery and equipment are added to the replacement parts exemption for farm machinery.
glass products (a packing material) is exempted.
ASSUMPTION (continued)
Electrical Energy and Gas Used in Cellular Glass Manufacture
Electrical energy and gas ultimately consumed in connection with the manufacture of cellular
Retreads and Retreading Materials
Retreading and recapping equipment, supplies and materials; tire carcasses; uncured rubber; sales of retreaded or recapped tires to a business that retreads or recaps tires for retail sale and the retreaded or recapped tires themselves are all exempted.
Grain Bins
Exempts sales of grain bins used for storage of grain for resale.
Dog Food for Breeders
Licensed commercial breeders may purchase feed for dogs tax exempt.
Coin-Operated Amusement Machines and Parts
Machines and parts used in a commercial, coin-operated amusement and vending business are
exempted if the sales tax is paid on the gross receipts from the machines.
Items Used in Research and Development of Prescription Pharmaceuticals
Tangible personal property purchased for use or consumption directly and exclusively in the research and development of prescription pharmaceuticals for humans and animals.
Radio and Television Station Equipment
Purchases of equipment by a licensed commercial radio or TV station when the purchase is a result of a federal mandate or technological change.
While data is not available to accurately estimate the total affected sales from this portion of the proposal, Oversight assumes such amounts would be significant, in excess of $1 million annually to state and local sales and use tax funds.
SECTION 144.062
EXEMPT ENTITY FLOW-THROUGH EXEMPTION
A section is added to the flow-through exemption in section 144.062 making it clear that an exempt entity is liable for purchases made with exemption certificates issued to contractors if it is later determined the exempt entity had no authority to issue the certificate to the contractor.
The amount of revenue impact resulting from this portion of the proposal is unknown.
This portion of the proposal would have minimal administrative impact to the Department of Revenue.
SECTION 144.517-TEXTBOOKS SALES TAX EXEMPTION
ASSUMPTION (continued)
Officials of the Department of Revenue (DOR) state this proposal exempts the sale of textbooks to students of any public or private university, college or other postsecondary
institution of higher learning offering a course of study leading to a degree in the liberal arts, humanities or sciences or in a professional vocational or technical field.
Officials of the Coordinating Board for Higher Education (CBHE) state this proposal would remove the state and local sales tax on postsecondary textbooks.
According to the 1996-97 Statistical Summary of Missouri Higher Education, there are 154,979 full-time, and 120,850 part-time students in Missouri institutions. This estimate assumes $300 per year for textbooks for part-time students, and $600 per year for books for full-time students. Assuming a state sales tax on textbooks of 3%, the total lost of general revenue is:
154,979 x ($600 x .03) = $2,789,622
+
120,850 x ($300 x .03) = $1,087,650
=
$3,877,272
Approximately half of this amount ($1,938,636) would be lost in the six remaining months of FY 1999.
CBHE has estimated 4% inflation on the cost of textbooks for each year after FY 1999.
FY 2000 - $2,901,206 + $1,120,279 = $4,021,485
FY 2001 - $3,017,286 + $1,176,354 = $4,193,640
Officials of the Office of Administration (COA) state that they have conferred with the officials of the Coordinating Board for Higher Education and would concur with the estimate provided by that agency.
Based on the estimate made by the Coordinating Board for Higher Education on the number of students and the expense for textbooks, Oversight has estimated the revenue loss to all state and local sales tax funds. Oversight estimates that taxable sales for FY 1997 would equal $119,491,864. A 4% growth rate was assumed. Oversight assumes the average local sales tax rate would be 1.5 cents. With 60% of the 1.5 cents going to cities and 40% of the 1.5 cents going to county government.
ASSUMPTION (continued)
SECTION 144.805-AVIATION JET FUEL SALES TAX
Officials of the Department of Revenue (DOR) state this portion of the proposal provides that all sales and use tax revenues on aviation jet fuel, except the constitutional sales and use taxes, are to be deposited in the Aviation Trust Fund effective September 1, 1998.
According to data maintained by the Department of Revenue, approximately $4.2 million in state sales and use tax on aviation jet fuel was collected in 1997. The portion of the sales and use tax that was deposited to the General Revenue Fund is approximately $3 million and the amount attributable to the School District Trust Fund is approximately $1 million. A growth rate of 6% was applied to this figure based on the growth in jet fuel usage as tabulated by the U.S. Bureau of Census. The corresponding losses and gain to the Aviation Trust Fund would be as follows:
$4.00 million 1997
$4.24 million 1998
$4.49 million 1999 (full year) = $3.74 million 1999 (10 months)
$4.76 million 2000
$5.05 million 2001
The impact to each fund would be as follows:
FY1999 FY2000 FY2001
General Revenue ($2,810,000) ($3,570,000) ($3,790,000)
Aviation Trust Fund $3,740,000 $4,760,000 $5,050,000
School District Trust Fund ($930,000) ($1,190,000) ($1,260,000)
ADMINISTRATIVE IMPACT:
Information Systems Division:
The Information Systems Division would be responsible for performing the computer changes necessary to deposit the specially coded airline accounts in the Aviation Trust Fund rather that the funds to which the moneys are currently deposited. In order to accomplish these changes, the Division would request approximately $2,920 in overtime moneys and $7,825 in State Data Center costs.
Division of Taxation and Collection:
The Division of Taxation and Collection would manually process the sales and use tax payments with existing resources until the system changes are completed.
ASSUMPTION (continued)
Oversight assumes that the duties required to make necessary programming changes could be performed with existing resources. State data center costs are included to reflect necessary testing of programming revisions.
This proposal would result in a decrease in Total State Revenues.
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Loss to General Revenue Fund | |||
| Income Tax Credit for Charcoal Producers | ($616,382) | ($616,382) | ($521,554) |
| Loss to General Revenue Fund | |||
| Educational Expense Income | |||
| Tax Deduction | $0 | ($7,769,655) | ($7,769,655) |
| Loss to General Revenue Fund | |||
| Income Tax Dependency Exemption | ($13,642,664) | ($32,807,878) | ($32,873,494) |
| Loss - General Revenue Fund | |||
| Elimination of sales tax on horse feed | ($287,070) | ($344,484) | ($344,484) |
| Loss - General Revenue Fund | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($218,341) | ($262,009) | ($262,009) |
| to | to | to | |
| ($436,681) | ($524,017) | ($524,017) | |
| Loss to General Revenue Fund | |||
| Adjuvants Sales Tax Exemption | ($72,926) | ($87,511) | ($87,511) |
| Loss to General Revenue Fund | |||
| Increase in Federal Income Tax Deduction | $0 | ($18,629,887) | ($19,002,485) |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| Savings to General Revenue Fund | |||
| Reduction in funds transferred to | |||
| Outstanding Schools Trust Fund | $0 | $18,629,887 | $19,002,485 |
| Loss - General Revenue Fund | |||
| Sales tax exemption for college textbooks | ($1,938,636) | ($4,032,363) | ($4,193,657) |
| Costs-Department of Revenue | |||
| Equipment and Expense | ($7,825) | $0 | $0 |
| Loss-sales and use tax collections on | |||
| aviation jet fuel | ($2,810,000) | ($3,570,000) | ($3,570,000) |
|
PARTIAL ESTIMATED NET EFFECT | |||
| ON GENERAL REVENUE FUND* | ($19,593,844) | ($49,490,282) | ($49,622,364) |
| TO | TO | TO | |
| ($19,812,184) | ($49,752,290) | ($49,884,372) | |
| * The unknown revenue loss due to the various additional sales and use tax exemptions is not reflected in the partial net effect to this fund. | |||
| OUTSTANDING SCHOOLS TRUST FUND | |||
| Loss to Outstanding Schools Trust Fund | |||
| Increase in Federal Income Tax Deduction | $0 | ($18,629,887) | ($19,002,485) |
| AVIATION TRUST FUND | |||
| Income-Sales and use tax collections on | |||
| aviation jet fuel | $3,740,000 | $4,760,000 | $5,050,000 |
| SCHOOL DISTRICT TRUST FUND | |||
| Loss - School District Trust Fund | |||
| Elimination of sales tax on horse feed | ($95,690) | ($114,828) | ($114,828) |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| Loss - School District Trust Fund | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($72,780) | ($87,336) | ($87,336) |
| to | to | to | |
| ($145,560) | ($174,672) | ($174,672) | |
| Loss to School District Trust Fund | |||
| Adjuvants Sales Tax Exemption | ($24,309) | ($29,170) | ($29,170) |
| Loss to School District Trust Fund | |||
| Sales tax exemption for college textbooks | ($646,212) | ($1,344,121) | ($1,397,886) |
| Loss-sales and use tax collections on | |||
| aviation jet fuel | ($930,000) | ($1,190,000) | ($1,260,000) |
|
PARTIAL ESTIMATED NET EFFECT | |||
| ON SCHOOL DISTRICT TRUST FUND* | ($1,768,991) | ($2,765,455) | ($2,889,220) |
| TO | TO | TO | |
| ($1,841,771) | ($2,852,791) | ($2,976,556) | |
| * The unknown revenue loss due to the various additional sales and use tax exemptions is not reflected in the partial net effect to this fund. | |||
| CONSERVATION SALES TAX FUND | |||
| Loss - Conservation Fund | |||
| Elimination of sales tax on horse feed | ($11,961) | ($14,354) | ($14,354) |
| Loss - Conservation Fund | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($9,098) | ($10,917) | ($10,917) |
| to | to | to | |
| ($18,195) | ($21,834) | ($21,834) | |
| Loss to Conservation Fund | |||
| Adjuvants Sales Tax Exemption | ($3,039) | ($3,646) | ($3,646) |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| Loss to Conservation Fund | |||
| Sales tax exemption for college textbooks | ($80,777) | ($168,015) | ($174,736) |
|
PARTIAL ESTIMATED NET EFFECT | |||
| ON CONSERVATION SALES TAX FUND* | ($104,875) | ($196,932) | ($203,653) |
| TO | TO | TO | |
| ($113,972) | ($207,849) | ($214,570) | |
| * The unknown revenue loss due to the various additional sales and use tax exemptions is not reflected in the partial net effect to this fund. | |||
| PARKS AND SOIL SALES TAX FUND | |||
| Loss - Parks and Soil Fund | |||
| Elimination of sales tax on horse feed | ($9,569) | ($11,483) | ($11,483) |
| Loss - Parks and Soil Fund | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($7,278) | ($8,734) | ($8,734) |
| to | to | to | |
| ($14,556) | ($17,467) | ($17,467) | |
| Loss to Parks & Soils Fund | |||
| Adjuvants Sales Tax Exemption | ($2,431) | ($2,917) | ($2,917) |
| Loss to Parks & Soils Fund | |||
| Sales tax exemption for college textbooks | ($64,621) | ($134,412) | ($139,789) |
|
PARTIAL ESTIMATED NET EFFECT | |||
| ON PARKS AND SOIL SALES TAX FUND* | ($83,899) | ($157,546) | ($162,923) |
| TO | TO | TO | |
| ($91,177) | ($166,279) | ($171,656) | |
| * The unknown revenue loss due to the various additional sales and use tax exemptions is not reflected in the partial net effect to this fund. | |||
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| HIGHWAY FUND | |||
| Loss to Highway Fund | |||
| Elimination of sales tax on | |||
| Medical assistive devices | (unknown) | (unknown) | (unknown) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| Loss to Local School Districts | |||
| Reduction in funds transferred from | |||
| the Outstanding Schools Trust Fund | (unknown) | (unknown) | (unknown) |
| Loss to Cities | |||
| Elimination of sales tax on horse feed | ($86,121) | ($103,345) | ($103,345) |
| Loss to Counties | |||
| Elimination of sales tax on horse feed | ($57,414) | ($68,897) | ($68,897) |
| Loss to Cities | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($65,502) | ($78,603) | ($78,603) |
| to | to | to | |
| ($131,004) | ($157,205) | ($157,205) | |
| Loss to Counties | |||
| Elimination of sales tax on | |||
| Medical assistive devices | ($43,668) | ($52,402) | ($52,402) |
| to | to | to | |
| ($87,336) | ($104,803) | ($104,803) | |
| Loss to Cities | |||
| Adjuvants Sales Tax Exemption | ($21,878) | ($26,253) | ($26,253) |
| Loss to Counties | |||
| Adjuvants Sales Tax Exemption | ($14,585) | ($17,502) | ($17,502) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| Loss to Cities | |||
| Sales tax exemption for college textbooks | ($581,591) | ($1,209,709) | ($1,258,097) |
| Loss to Counties | |||
| Sales tax exemption for college textbooks | ($387,727) | ($806,473) | ($838,731) |
|
PARTIAL ESTIMATED NET EFFECT | |||
| ON LOCAL GOVERNMENT* | ($1,258,486) | ($2,363,184) | ($2,443,830) |
| TO | TO | TO | |
| ($1,367,656) | ($2,494,187) | ($2,574,833) | |
| * The unknown revenue loss due to the various additional sales and use tax exemptions and decreases to the Outstanding Schools Trust Fund is not reflected in the partial net effect to this fund. | |||
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that they purchase eligible equipment which may be taken as a credit against their income tax liability.
Small businesses would be expected to be fiscally impacted to the extent that they pay sales tax on taxable items. The exemptions from state and local sales tax in this proposal would cause small businesses to pay less for such items.
DESCRIPTION
This act authorizes a state income tax credit equal to 50% of the purchase price (or manufacturing cost, adjusted for inflation) of the best available control technology equipment connected with the production of charcoal in Missouri.
This act authorizes a state income tax deduction for school tuition, attendance fees,
supplies, and transportation costs, up to a maximum of $2,500 for each dependent. It applies to
all taxable years beginning on or after January 1, 1999.
This act increases the income tax deduction for dependents, for all tax years beginning on or after January 1, 1999, from the current $400 per dependent to $800.
DESCRIPTION
(Continued)
Currently the federal tax deduction for corporate taxpayers is limited to 50% of the federal income taxes paid. This proposal would increase the deduction to 75% for all tax years beginning on or after September 1, 1998.
This act exempts the following items from sales and use tax: all feed for livestock or poultry, regardless of whether the livestock or poultry is to be sold ultimately in processed form or otherwise; materials and manufactured goods which become ingredient or component parts of glass products; replacement machinery and parts; materials and equipment used in producing newspapers; electrical energy used in a material recovery processing plant, if its cost exceeds 10% of the total cost of production or if the raw materials contain at least 25% recovered materials; electrodes which are used or consumed in manufacturing or processing and have a useful life of less than one year; lubricants used exclusively for farm machinery and equipment; electrical energy or gas consumed in the manufacturing of cellular glass products; retreading or recapping equipment, supplies or materials; tire carcasses; uncured rubber; or retreaded or recapped tires sold to any business which retreads, recaps, or resells any retreaded or recapped tires; pesticides or herbicides used in the production of crops, livestock or poultry; grain bins used for storage of grain for resale; dog food purchased by commercial breeders; and machines and parts used in commercial, coin-operated amusement and vending businesses; tangible
personal property purchased for use or consumption directly and exclusively in the research and development of prescription pharmaceuticals for human and animals; purchases of equipment by a licensed commercial radio or TV station when the purchase is a result of a federal mandate or technological change. The act also specifies that a tax-exempt entity which issues improper or unauthorized project exemption certificates is liable for the tax on the personal property and materials for that project.
This bill exempts from sales and use tax sales of certain assistive devices, such as wheelchairs, stairway lifts and braille writers, necessary to persons with one or more physical or mental disabilities to enable them to function more independently.
This act clarifies the current exemption from sales and use tax of pesticides to include adjuvants such as crop oils, surfactants, wetting agents, and other pesticide carriers which improve or enhance the effect of a pesticide.
This bill exempts from state and local sales and use taxes the purchase of certain textbooks by a student of any postsecondary institution of higher learning offering a course of study leading to a degree in the liberal arts, humanities, or sciences or in a technical, vocational, or professional field.
DESCRIPTION
(Continued)
The proposal would provide that all sales taxes on aviation jet fuel (except those otherwise designated in the Constitution) shall be placed in the aviation trust fund beginning September 1, 1998.
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
Department of Natural Resources
Department of Elementary and Secondary Education
Coordinating Board for Higher Education
Office of Administration
Department of Economic Development
Jeanne Jarrett, CPA
Director
March 23, 1998