SB 0816 - Fiscal Note

Fiscal Note - SB 0816 - Authorizes state income tax credit on personal property tax paid on motor vehicles used for non-business purposes

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3517-01

BILL NO. SB 816

SUBJECT: Tax and Revenue: Income

TYPE: Original

DATE: February 9, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	$0	($300,022,936)	($309,020,123)
Total Estimated Net Effect on All State Funds	$0	($300,022,936)	($309,020,123)

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	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

ADMINISTRATIVE IMPACT:

Last year, there were approximately 2.5 million Missouri returns filed. The Division of Taxation would request one temporary clerk and two temporary Tax Processing Technician's for every 1 million returns impacted by this credit. These employees are needed during income tax season to assist with opening mail, pre-edit, error corrections, correspondence and file maintenance. The Department is hypothesizing that at least 2 million credits will be taken.

Oversight has allowed the Division of Taxation one Clerk I to handle the provisions of this proposal.

Officials from the State Tax Commission (TAX) stated that for 1996 tax on motor vehicles was $401 million. TAX staff assumed 93% of motor vehicles were for non-business uses and that 15% of filers would owe no state income tax, or would not be able to use the full credit. TAX officials assumed this proposal would reduce General Revenue by $300,000,000 in FY 2000 and $309,000,000 in FY 2001. A three percent growth rate was assumed.

Oversight assumes that taxpayers will not adjust their withholdings in FY 1999 to take advantage of this proposal.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(6 Mo.)
GENERAL REVENUE FUND
Loss to General Revenue Fund
Additional Income tax credits	$0	($300,000,000)	($309,000,000)
Cost to General Revenue Fund
Department of Revenue (DOR)
Personal Service (1 FTE)	$0	($14,994)	($15,369)
Fringe Benefits	$0	($4,203)	($4,308)
Expense and Equipment	$0	($3,739)	($446)
Administrative Cost to DOR	$0	($22,936)	($20,123)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND	$0	($300,022,936)	($309,020,123)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(6 Mo.)
	0	0	0
FISCAL IMPACT - Small Business

No direct fiscal impact on small businesses would be expected as result of this proposal.

DESCRIPTION

This proposal would authorize an individual income tax credit for personal property taxes paid by a taxpayer on motor vehicles used for non-business purposes.

This proposal would become effective for tax years beginning on or after January 1, 1999.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. This proposal would affect Total State Revenues.

SOURCES OF INFORMATION

Department of Revenue

State Tax Commission

Jeanne Jarrett, CPA

Director

February 9, 1998