SB 0817 - Fiscal Note

Fiscal Note - SB 0817 - Reduces State Sales/Use Tax Rate by 0.25%

L.R. NO.  3102-01
BILL NO.  SB 817
SUBJECT:  Business; Taxation; Sales tax
TYPE:     Original
DATE:     February 5, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1996             FY 1997           FY 1998
General Revenue      ($33,600,000)      ($140,400,000)    ($146,700,000)

Highway               ($1,800,000)        ($7,425,000)      ($7,725,000)


Total Estimated
Net Effect on All
State Funds          ($35,400,000)      ($147,825,000)    ($154,425,000)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1996             FY 1997           FY 1998
None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1996             FY 1997           FY 1998
Local Government        ($600,000)        ($2,475,000)      ($2,575,000)


                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Elementary and Secondary Education indicate
this proposal would not fiscally impact their agency.

Officials of the Department of Revenue assume this proposal would lower the
General Revenue sales/use tax rate by one-fourth of one percent (.25%). The
proposed rate reduction is assumed to be effective April 1, 1996. Assuming
the rate reduction would be effective April 1, 1996, there would be a
one-time administrative impact to the Department of Revenue consisting of
notification costs to retailers and rate cards in the amount of approximately
$51,015 in FY 96.

Officials of the Missouri Highway and Transportation Department (MHTD) assume
this proposal would reduce the general state sales tax from 4% to 3.75%. The
MHTD, Cities and Counties currently receive 1/2 of the 4% general state sales
tax on sales and leases of motor vehicles and trailers and 4% of the state
use tax on motor vehicles and trailers. The total estimated fiscal impact on
the Highway, Road and State Transportation fund for fiscal year 1997 would be
a decrease of $8,054,000. This proposal would also affect cities and counties
by decreasing there revenues by $1,985,000 for fiscal year 1997.

Office of Administration (COA) officials estimate is based on the general
revenue sales tax estimate in the FY97 Executive Budget which estimates sales
and use tax collections at  $1,685,000,000. COA assumes the sales tax will
grow by 4.5% in years beyond FY97.

Oversight has based the estimate of the fiscal impact of this proposal on the
Office of Administration estimates.

Oversight assumes that twenty-five percent of the loss of sales tax revenues
in the Highway Fund would pass on to counties and cities.

FISCAL IMPACT - State Government       FY 1996        FY 1997        FY 1998
                                       (3 Mo.)
GENERAL REVENUE FUND

Cost-Department of Revenue
  Sales Tax Mailing                  ($51,015)             $0             $0

Loss - General Revenue Fund
   Decrease in collections due to
   reduced sales tax rate        ($33,580,000) ($140,400,000) ($146,700,000)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND             ($33,600,000) ($140,400,000) ($146,700,000)

HIGHWAY FUND

Loss - Highway Fund
   Decrease in collections due to
   reduced sales tax rate         ($1,800,000)   ($7,425,000)   ($7,725,000)

ESTIMATED NET EFFECT ON
HIGHWAY FUND                      ($1,800,000)   ($7,425,000)   ($7,725,000)

FISCAL IMPACT  - Local Government      FY 1996        FY 1997        FY 1998
                                       (3 Mo.)
Loss - Local Governments
   Decrease in distributions from
   state highway fund.              ($600,000)   ($2,475,000)   ($2,575,000)

ESTIMATED NET EFFECT TO
LOCAL GOVERNMENTS                   ($600,000)   ($2,475,000)   ($2,575,000)

DESCRIPTION

This proposal lowers the general revenue sales tax rate from 3.00% to 2.75%.
This act has an emergency clause and shall be in full force and effect on
April 1, 1996.

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 Elementary and Secondary Education
Department of Revenue
Missouri Highway and Transportation Department
Office of Administration