SB 0823 - Fiscal Note

Fiscal Note - SB 0823 - Exempts Food From State Sales Tax

L.R. NO.  3108-01
BILL NO.  SB 823
SUBJECT:  Taxation; Sales tax
TYPE:     Original
DATE:     February 5, 1996



                              FISCAL SUMMARY

                    ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED               FY 1997             FY 1998             FY 1999

General Revenue   ($134,922,667) to   ($210,479,360) to   ($218,898,534) to
                     ($178,267,061)      ($278,096,615)      ($289,220,480)

School District     ($44,974,422)to     ($70,159,787)to     ($72,966,178)to
Trust                 ($59,422,354)       ($92,698,872)       ($96,406,827)

Conservation        ($5,621,778) to     ($8,769,973) to     ($9,120,772) to
                        $5,942,235)        ($9,269,887)        ($9,640,683)

Parks and Soils     ($4,497,422) to     ($7,015,979) to     ($7,296,618) to
                       ($5,942,235)        ($9,269,887)        ($9,640,683)

Total Estimated
Net Effect on All ($190,016,089) to   ($296,425,099) to   ($308,282,103) to
State Funds          ($251,059,444)      ($391,652,733)        407,318,843)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED               FY 1997             FY 1998             FY 1999

None

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


                    ESTIMATED NET EFFECT ON LOCAL FUNDS

FUND AFFECTED                FY 1997            FY 1998             FY 1999

Local Government     ($67,461,333)to   ($105,239,680)to    ($109,449,267)to
                       ($89,133,531)     ($139,048,308)      ($144,610,240)


                              FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Revenue (DOR) assume there will be increased
work due to confusion from taxpayers and retailers; however, DOR will utilize
existing resources to implement this proposal.

Office of Administration (COA) officials assume this proposal would have a
fiscal impact on lost sales tax revenue to the General Revenue Fund, the
Highway Fund, the Parks Fund, the Soil and Water Fund, and the Conservation
Fund. COA states the estimate is based on data on Personal Consumption


Expenditures for food for off premises for the United States supplied by the
U. S. Department of Commerce. COA officials assumed Missouri's's share is
based on Missouri's' pro rata share of U. S. personal income. COA assumes
that food spending is increasing  at 4.0% per year. COA further assumes  that
this proposal would be effective on October 1, 1996.

Oversight has lowered the estimates made by COA by $16,000,000 annually to
reflect food stamp sales that are already tax exempt and will use these
amounts to reflect the maximum loss to state and local funds. Oversight has
based the minimum loss to state and local funds on estimates made by the
University of Missouri Research Center, which used the Department of Revenue
data files to calculate their estimates. Therefore Oversight has shown a
range for the fiscal impact of this proposal.

FY97 projections assume eight months of collections, since October 1996 taxes
won't be received until November 1996.


FISCAL IMPACT - State Government      FY 1997        FY 1998        FY 1999

                                      (9 Mo.)
GENERAL REVENUE FUND

Loss - General Revenue Fund
   Decrease in sales tax       ($134,922,667) ($210,479,360) ($218,898,534)
                                           to             to             to
                               ($178,267,061) ($278,096,615) ($289,220,480)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND           ($134,922,667) ($210,479,360) ($218,898,534)
                                           to             to             to
                               ($178,267,061) ($278,096,615) ($289,220,480)

SCHOOL DISTRICT TRUST FUND

Loss - School District Trust Fund
   Decrease in sales tax        ($44,974,222)  ($70,159,787)  ($72,966,178)
                                           to             to             to
                                ($59,422,354)  ($92,698,872)  ($96,406,827)

CONSERVATION FUND

Loss - Conservation Fund
   Decrease in sales tax         ($5,621,778)   ($8,769,973)   ($9,120,772)
                                           to             to             to
                                 ($5,942,235)   ($9,269,887)   ($9,640,683)

PARKS & SOILS FUND

Loss - Parks & Soils Fund
   Decrease in sales tax         ($4,497,422)   ($7,015,979)   ($7,296,618)
                                           to             to             to
                                 ($5,942,235)   ($9,269,887)   ($9,640,683)


FISCAL IMPACT  - Local Government     FY 1997        FY 1998        FY 1999
                                      (9 Mo.)
Loss - Cities and Counties
   Decrease in sales tax        ($67,461,333) ($105,239,680) ($109,449,267)
                                           to             to             to
                                ($89,133,531) ($139,048,308) ($144,610,240)

ESTIMATED NET EFFECT ON
LOCAL GOVERNMENTS               ($67,461,333) ($105,239,680) ($109,449,267)
                                           to             to             to
                                ($89,133,531) ($139,048,308) ($144,610,240)

DESCRIPTION

As of October 1, 1996, this proposal would provide a sales tax exemption for
sales of food for human consumption, not including sales of food to be
consumed on the seller's premises.

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
Office of Administration
University of Missouri Research Center