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 0751 - Authorizes income tax credit to bowling alley operators equal to 10% of purchase price of machinery and equipment
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3313-06
BILL NO. HCS for SB 751
SUBJECT: Economic Development-Taxation and Revenue
TYPE: Original
DATE: April 29, 1998
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Various | $0 | ($300,000) | ($300,000) |
| Partial Estimated
Net Effect on All State Funds* |
$0 | ($300,000) | ($300,000) |
*Negative unknowns are not reflected in totals.
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Local Government | (Unknown) | (Unknown) | (Unknown) |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 5 pages.
FISCAL ANALYSIS
ASSUMPTION
SECTION 135.444-Bowling Alleys tax credit
In a similar proposal officials of the Department of Revenue (DOR) stated this proposal creates an income tax credit for bowling alley operators equal to ten percent of the purchase price of machinery and equipment. This is a non-refundable credit that can be carried forward for up to four years or assigned to a third party.
ADMINISTRATIVE IMPACT:
Currently, there are less than 200 bowling alleys registered in Missouri. The Division of Taxation will be able to process the credits received using existing resources and staff. However, one Tax Processing Technician would be needed for every 3,680 credits received. The personal computer system in the Central Processing Bureau will need modifications in order to input and verify the credits. The Division of Taxation estimates it will take 3 months of overtime ($7,905) for the Computer Specialist to complete these modifications. The income and corporate tax systems and forms will also need modifications. These modifications would be completed by the Information Systems Division with existing resources and staff.
Oversight assumes the Department of Revenue could handle the provisions of this proposal with existing staff and resources.
In a similar proposal officials of the Office of Administration (COA) stated capital expenditures by bowling alleys annually in Missouri is $2,500,000, and expenditures on personal property is $160,000 annually according to Missouri bowling alley operators. Therefore their annual expense on machinery and equipment is $2,660,000. A 10% tax credit would yield a revenue loss of $266,000 annually. The distribution of lost revenue between the individual and corporate income tax is not known. COA staff assume that taxpayers would not adjust their withholdings in FY99 to take advantage of this new tax credit.
Officials of the Department of Economic Development (DED) state there are 167 bowling alleys in Missouri that would be eligible for the credit. According to Brunswick Bowling Equipment corporate headquarters, new equipment to establish one lane of bowling costs $44,000. Two thirds of this lane cost (pin setters and lanes) has a 25 year life expectancy and the other one third (seating, scoring equipment, etc.) has a life expectancy of 8 years. Other ancillary costs for balls, shoes, cash register, etc. are not included in the projection. Multiplying $44,000 by 2/3 and dividing by 25 gives a yearly total of $1173.92 per lane per year. The same calculation (44,000 x 1/3) divided by 8 year replacement equals an additional $1831.50 per lane
ASSUMPTION (continued)
per year for a total replacement cost of $3005.42 per lane per year. No figures were available for the average number on lanes in a bowling alley so the assumption of an average size of 12 lanes
was used. Multiplying $3005.42 by 12 lanes and again by 167 bowling alleys and again by the 10% credit amount gives a total credit possible per year of $602,286.17. The presumption that this replacement schedule is the optimum leads to the assumption that possibly less than one half would replace equipment at these intervals. This produces a revenue impact of $300,000 annually and does not take into account ancillary costs for balls, shoes, cash register, etc.
DED assumes the credit would be applied for once per year and could require a large amount of labor intensive review of purchase invoices to issue a credit to a maximum of 167 bowling alleys. One Economic Development Incentive Specialist I for .25 of the year plus related expense and equipment. DED assumes that the DOR would verify credits claimed when audits are conducted on these bowling alleys.
Oversight assumes the Department of Economic Development could handle the provisions of this proposal with existing staff and resources.
For purposes of this fiscal note, Oversight has reflected the revenue impact estimated by the Department of Economic Development for this portion of the proposal. Oversight assumes that taxpayers would not adjust their withholdings in FY99 to take advantage of this new tax credit.
SECTIONS 144.034 and 1
Film and Video Productions
Missouri made films and video productions would be tax exempt.
Film Production Companies
Purchases (i.e., film, tapes, etc), made in Missouri would be exempt.
Oversight does not possess data on various components of this portion of the proposal which would lead to an estimate of the total fiscal impact to state and local sales tax funds, therefore these amounts has been stated as an unknown loss to various funds.
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 | |||
| Bowling Alley Income Tax Credit | $0 | ($300,000) | ($300,000) |
| VARIOUS STATE FUNDS | |||
| Loss | |||
| Sales Tax Exemptions | (Unknown) | (Unknown) | (Unknown) |
| PARTIAL NET EFFECT ON | |||
| ALL STATE FUNDS* | $0 | ($300,000) | ($300,000) |
| *Negative unknowns are not reflected in totals. | |||
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| POLITICAL SUBDIVISIONS | |||
| Loss | |||
| Sales Tax Exemptions | (Unknown) | (Unknown) | (Unknown) |
| FISCAL IMPACT - Small Business | |||
Small businesses would be expected to be fiscally impacted to the extent that they purchase bowling machinery and equipment and apply for the tax credit.
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 an income tax credit for operators of bowling alleys in an amount equal to ten percent of the purchase price of the machinery and equipment required for bowling. The taxpayer is required to apply for the credit to the Director of the Department of Economic Development, who then certifies to the Director of the Department of Revenue whether the taxpayer has made purchases which qualify for the credit. The credit may be carried over for up to four years and may be assigned to a third party.
DESCRIPTION
(Continued)
This proposal also allows a state and local sales tax exemption for custom film or video productions and tangible personal property purchased or leased by certain qualified film production companies.
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 Economic Development
Jeanne Jarrett, CPA
Director
April 29, 1998