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 0714 - Exempts from sales and use tax replacement machinery and parts
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3169-01
BILL NO. SB 714
SUBJECT: Economic Development; Revenue Dept.;Taxation and Revenue-General; Taxation and Revenue-Sales and Use
TYPE: Original
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS Net Effect on All State Funds* *Revenue loss could be substantial. ESTIMATED NET EFFECT ON FEDERAL FUNDS Numbers within parentheses: ( ) indicate costs or losses This fiscal note contains 3 pages. ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue
(unknown)
(unknown)
(unknown) School District Trust
(unknown)
(unknown)
(unknown) Conservation
(unknown)
(unknown)
(unknown) Parks and Soil
(unknown)
(unknown)
(unknown) Total Estimated
(expected to exceed
$100,000)
(expected to exceed
$100,000)
(expected to exceed
$100,000)
FUND AFFECTED
FY 1999
FY 2000
FY 2001 None
Total Estimated
$0
$0
$0
FUND AFFECTED
FY 1999
FY 2000
FY 2001 Local Government
(unknown)
(unknown)
(unknown)
FISCAL ANALYSIS
ASSUMPTION
Officials of the Department of Revenue (DOR) state this proposal would exempt:
1. Replacement parts used in manufacturing, mining, fabricating or producing; 2. Parts required solely for the operation, installation and construction of such machinery and equipment for new or expanded recycling facilities; and, 3. Parts for equipment and machinery used in plant expansion. DOR staff state that this proposal would have a minimal administrative impact on their agency. The revenue impact is unknown, it is anticipated the loss would be substantial.
Oversight assumes this proposal would have a negative unknown impact to the General Revenue Fund, School District Trust Fund, Conservation Fund and Parks & Soil Fund as well as local governments since sales tax revenues would decrease. While data is not available to accurately estimate total affected sales, Oversight assumes that the revenue loss as a result of this proposal would exceed $100,000 annually.
This proposal would result in a decrease in Total State Revenues.
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| Loss to General Revenue Fund | |||
| Replacement parts and Equipment | |||
| Sales Tax Exemption | (unknown) | (unknown) | (unknown) |
| Loss to School District Trust Fund | |||
| Replacement parts and Equipment | |||
| Sales Tax Exemption | (unknown) | (unknown) | (unknown) |
| Loss to Conservation Fund | |||
| Replacement parts and Equipment | |||
| Sales Tax Exemption | (unknown) | (unknown) | (unknown) |
| *Total revenue loss could be substantial. | |||
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (Continued) | (10 Mo.) | ||
| Loss to Parks & Soils Fund | |||
| Replacement parts and Equipment | |||
| Sales Tax Exemption | (unknown) | (unknown) | (unknown) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| Loss to Cities and Counties | (unknown) | (unknown) | (unknown) |
| FISCAL IMPACT - Small Business | |||
Small businesses would be expected to be fiscally impacted to the extent that they purchase replacement parts for manufacturing equipment. Small manufacturers could purchase replacement parts for manufacturing equipment exempt from sales/use tax.
DESCRIPTION
This bill clarifies the sales and use tax exemption for sales of replacement machinery
and repair parts.
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
Jeanne Jarrett, CPA
Director
February 9, 1998