Fiscal Note - SB 0457 - Allows U.S. Postal Service Postmark to Constitute Proof of Timely Payment of License Taxes to Cities and Counties
L.R. NO. 1785-08
BILL NO. HCS for SCS for SB's 457 & 458
SUBJECT: Taxation and Revenue
TYPE: Original
DATE: May 8, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue (over $1,100,000) (over $1,100,000) (over $1,100,000)
Highway (unknown) (unknown) (unknown)
School District
Trust (over $405,000) (over $405,000) (over $405,000)
Conservation (over $60,000) (over $60,000) (over $60,000)
Parks and Soil (over $40,000) (over $40,000) (over $40,000)
Partial Estimated
Net Effect on All
State Funds (over $1,605,000) (over $1,605,000) (over $1,605,000)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government (over $550,000) (over $550,000) (over $550,000)
FISCAL ANALYSIS
ASSUMPTION
SECTION 71.625- POSTMARK
In a similar proposal officials of the City of St. Louis stated that they
currently recognize the date of mailing and assume no fiscal impact.
In a similar proposal officials of Jackson County assumed no fiscal impact.
In a similar proposal officials of the Cities of St. Charles, Mexico, and
Poplar Bluff assumed no fiscal impact.
In a similar proposal the Director of Administration of St. Louis County
assumed that there could be a loss of interest if the deadline were on a
non-working day or holiday. Officials assume the amount of loss would be
insignificant, and could not estimate the amount of loss. Officials stated
that loss of interest would be less than $100,000.
Oversight will show fiscal impact to be zero ($0) to (Unknown) local impact.
SECTION 144.025 TRADE-INS
Officials of the Department of Revenue (DOR) state this proposal would
require sales tax to be paid on articles used as trade-ins in order to obtain
sales tax credit for the article.
Under current law, credit is given against the sales tax due on a retail
purchase for the value of any article taken in trade, whether tax has been
paid on that item or not. This bill requires tax to have been paid on the
article taken in trade and requires that credits for trade-ins on motor
vehicles, trailers, boats and outboard motors only be granted if like items
are traded in. The effect should be a gain to all state and local sales tax
funds; however, the amount of such gain is unknown.
Motor Vehicle Bureau (MVB) would be required to revise and reprint the
titling manual and revise policies. Mailing costs would also be incurred for
these revisions. Estimated cost to General Revenue for FY98 is $11,265.
REVENUE IMPACT:
DOR stated the proposal would effect a net gain to all state and local sales
tax funds. The amount of such gain is indeterminable for the following
reasons:
1) Motor vehicle trade-in values are not currently tracked;
2) Many title applicants omit the trade-in information from the title
application and simply show the amount they paid as the purchase price; and,
3) The number of persons that will attempt to trade in merchandise for which
they have no proof of payment of the original tax amount is indeterminable.
It is thought that this will result in a substantial gain to all state and
local sales tax funds in all regular sales and use transactions involving
trade-ins since the trade-in will not be allowed unless such proof is
maintained. This will apply to gift transactions as well, meaning that if an
item is given as a gift and later used as a trade-in on a new item, no
trade-in credit would be allowed unless the person proved the giver of the
gift had paid sales tax on the original purchase of the item.
SECTION 144.030.2.1 AGRICULTURE AND ANIMALS
Officials of the Department of Revenue (DOR) state this proposal would exempt
all feed not currently exempted for livestock and poultry. Specifically, feed
that is used for livestock and poultry that will not be resold at retail
would be exempted by this proposal.
According to sales tax return information gathered in FY91, retailers claimed
exemption for $1,180,289,871 in sales of feed, seed and other agricultural
chemicals. Assuming a 5% growth rate, the estimated amount of such materials
in FY92 would have been $1,239,304,365. According to the 1992 Census of
Agriculture, Missouri Agriculture Highlights, feed comprised 55% of all feed,
fertilizer, agricultural chemical and seed purchases in 1992, leading to the
conclusion that $681,617,401 (55% of $1,239,304,365) represents feed sales
exempt in 1992. The source also indicates feed purchased as an expense of
agricultural production totaled $751,670,000 in FY 92. After subtracting
$681,617,401 for sales exempt under current law, feed sales that would have
been exempted by this proposal would have been $70,052,599 in FY 92. Applying
a 5% growth rate to this figure and adjusting for the number of months
effective in each fiscal year, this estimate may be projected as a maximum
amount of revenue loss that could result from the exemption provided in this
proposal.
DOR staff state when estimating revenue loss resulting from this proposal, it
is important to note that the figures shown are the maximum that could be
anticipated. Previous legislative changes have expanded the definition of
"livestock" and feed for livestock that is later resold on hoof or
slaughtered and sold at retail is already exempt; therefore, a portion of
these sales is already exempt under current law and should not be attributed
to this proposal. Although it is unknown how much revenue would be lost if
this proposal were enacted, these amounts may be used as a gauge of the
largest anticipated impact resulting from the exemption of feed for livestock
that is not intended to be resold "in processed form or otherwise at retail".
Therefore DOR estimates a range from $0 to over $5 million annually.
Oversight assumes the proposal would primarily exempt sales of horse feed,
although some other animal feed may become exempt as well. The Department of
Agriculture reported that in 1995 manufacturers shipped 34,010 tons of
complete horse feed and 4,266 tons of supplemental horse feed within or into
Missouri for sale within the state, for a total of 38,276 tons. A large
Missouri manufacturer/distributor stated that an average retail value of the
feed would be $280 to $300 per ton. Oversight calculated total retail sales
of horse feed to be approximately $11,482,800. This figure would not include
custom mixed feed, oats, and other miscellaneous livestock feed but would
represent the majority of feed which would gain tax exemption. A loss to the
General Revenue Fund of approximately $345,000 annually has been calculated,
in addition to losses to other state and local funds.
SECTION 144.030.2.2, 144.030.2.13, 144.030.2.31 GLASS PRODUCTS
Oversight assumes this portion of the proposal would exempt firebrick,
electrodes and electrical or gas energy from sales taxes for the production
of glass products. Oversight has been unable to locate any national or state
level data to determine the amount of firebrick, electrodes and electrical or
gas energy used for the production of glass in Missouri. Therefore the
estimate has been shown as an unknown loss to state and local sales tax
funds.
SECTION 144.030.2.4 and 144.030.2.5- REPLACEMENT MACHINERY
Oversight assumes this portion of the proposal clarifies that replacement
machinery used in manufacturing products to be sold for final use or
consumption is exempt from sales tax. Fiscal impact would result from the
language exempting parts used directly in manufacturing, mining, fabricating,
or producing a product. While data does not exist to arrive at an accurate
estimate, Oversight assumes a substantial revenue loss would occur in
exempting repair parts purchased by manufacturing firms. This loss would be
expected to exceed $500,000 annually.
SECTION 144.030.2.12 ENERGY USED FOR RECYCLING MATERIALS
Oversight assumes this portion of the proposal would give companies a 25%
sales tax allowance on energy used for recycling materials, destined for
landfills, as part of their raw material feedstock. Oversight has been unable
to locate any data to determine the amount of energy used for recycling
materials by companies in Missouri.
SECTION 144.030.2.22 LUBRICANTS AND SECTION 144.030.2.34 DOG FOOD
Officials of the Department of Revenue (DOR) state this proposal would have
no administrative impact to their agency, but that exemption of lubricants
used on farm equipment could have a substantial revenue impact.
Officials of the Office of Administration (COA) state that they have not been
able to find any empirical basis to estimate the fiscal impact of this
proposal.
Oversight assumes for purposes of this fiscal note that the loss to state and
local sales tax funds from this proposal is unknown but would exceed $100,000
annually.
SECTION 144.030.2.32 TIRE RETREADING MATERIALS
Officials of the Department of Revenue (DOR) state this proposal exempts from
sales/use taxes tire retreading or recapping equipment, supplies and
materials, tire carcasses, uncured rubber, or retreaded or recapped tires
sold to any retreading business that retreads, recaps or resells retreated or
recapped tires.
The Department of Revenue has no information upon which to base an estimate
of the revenue loss that could result from passage of this proposal.
Officials of the Office of Administration (COA) state there is no information
upon which to base an estimate of the revenue loss from the passage of this
proposal. COA staff stated that there are approximately 3 entities currently
in the business of tire retreading and that supplies usually run about
$250,000.
Oversight assumes for purposes of this fiscal note that there would be an
unknown revenue loss to all state and local funds.
SECTION 144.030.2.33 PESTICIDES OR HERBICIDES
Officials of the Department of Revenue (DOR) state this portion of the
proposal would have a minimal impact to their agency.
Oversight assumes for purposes of this fiscal note that the majority of sales
in this category are already exempted from sales tax and the sales which
would be affected would be minimal, therefore; the negative revenue impact of
this proposal would be less than $100,000 to any one fund annually.
SECTION 144.030.2.35 GAMEBIRDS AND SECTION 144.030.2.36 BOWLING EQUIPMENT AND
MACHINERY.
Oversight has no information upon which to base an estimate of the revenue
loss that could result from these two exemptions. Loss of revenue will be
shown as (unknown), expected to be greater than $100,000 per year.
SECTION 144.062.6 EXEMPTION CERTIFICATES
Officials of the Department of Revenue (DOR) state that this proposal changes
the project exemption certificate procedure to be sure that the exempt entity
is responsible for any tax liability if they have issued a project exemption
certificate outside their statutory authority. This is a protection measure
for those contractors relying on such certificates.
This proposal would result in a decrease in Total State Revenues since Sales
Tax collections are included in the calculation of Total State Revenue.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE FUND
Income - General Revenue Fund
Trade-ins unknown unknown unknown
Loss - General Revenue Fund
Elimination of sales tax on horse
feed ($344,484) ($344,484) ($344,484)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
Manufacturing repair parts (over (over (over
$500,000) $500,000) $500,000)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$100,000) $100,000) $100,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($100,000) ($100,000) ($100,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment and machinery (over (over (over
$100,000) $100,000) $100,000)
PARTIAL ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND (over (over (over
$1,100,000) $1,100,000) $1,100,000)
HIGHWAY FUND
Income - Highway Fund
Trade-ins unknown unknown unknown
Loss - Highway Fund
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
ESTIMATED NET EFFECT ON
HIGHWAY FUND (unknown) (unknown) (unknown)
SCHOOL DISTRICT TRUST FUND
Income - School District Trust Fund
Trade-ins unknown unknown unknown
Loss - School District Trust Fund
Elimination of sales tax on horse
feed ($95,690) ($114,828) ($114,828)
Manufacturing repair parts (over (over (over
$165,000) $165,000) $165,000)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$30,000) $30,000) $30,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($30,000) ($30,000) ($30,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment and machinery (over (over (over
$30,000) $30,000) $30,000)
PARTIAL ESTIMATED NET EFFECT ON
SCHOOL DISTRICT TRUST FUND (over (over (over
$405,000) $405,000) $405,000)
CONSERVATION FUND
Income - Conservation Fund
Trade-ins unknown unknown unknown
Loss - Conservation Fund
Elimination of sales tax on horse
feed ($11,961) ($14,354) ($14,354)
Manufacturing repair parts (over (over (over
$20,000) $20,000) $20,000)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$4,000) $4,000) $4,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($4,000) ($4,000) ($4,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment and machinery (over (over (over
$4,000) $4,000) $4,000)
PARTIAL ESTIMATED NET EFFECT ON
CONSERVATION FUND (over $60,000) (over $60,000) (over $60,000)
PARKS AND SOIL FUNDS
Income - Parks and Soil Funds
Trade-ins unknown unknown unknown
Loss - Parks and Soil Funds
Elimination of sales tax on horse
feed ($9,569) ($11,483) ($11,483)
Manufacturing repair parts (over (over (over
$15,000) $15,000) $15,000)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$3,000) $3,000) $3,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($3,000) ($3,000) ($3,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment and machinery (over (over (over
$3,000) $3,000) $3,000)
PARTIAL ESTIMATED NET EFFECT ON
PARKS AND SOIL FUNDS (over $40,000) (over $40,000) (over $40,000)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
Loss to Certain Counties/Cities
From loss of interest $0 to $0 to $0 to
(Unknown)* (Unknown)* (Unknown)*
*Loss of income would be expected to be less than $100,000 in a given year.
Income to Cities
Sales Tax on Trade-ins unknown unknown unknown
Loss to Cities
Elimination of sales tax on horse
feed ($86,121) ($103,345) ($103,345)
Manufacturing repair parts (over (over (over
$150,000) $150,000) $150,000)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$30,000) $30,000) $30,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($30,000) ($30,000) ($30,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment and machinery (over (over (over
$30,000) $30,000) $30,000)
Income to Counties
Sales Tax on Trade-ins unknown unknown unknown
Loss to Counties
Elimination of sales tax on horse
feed ($57,414) ($68,897) ($68,897)
Manufacturing repair parts (over (over (over
$100,000) $100,000) $100,000)
Firebrick, electrodes and electrical/
gas energy (unknown) (unknown) (unknown)
25% sales tax allowance for
recycling (unknown) (unknown) (unknown)
Lubricants for farm machinery/
Dog Food (over (over (over
$20,000) $20,000) $20,000)
Tire retreading or recapping
equipment (unknown) (unknown) (unknown)
Pesticides or Herbicides ($20,000) ($20,000) ($20,000)
Non domestic gamebirds (unknown) (unknown) (unknown)
Bowling equipment & machinery (over (over (over
$30,000) $30,000) $30,000)
PARTIAL ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT (over (over (over
$550,000) $550,000) $550,000)
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that
they pay sales tax on taxable items.
DESCRIPTION
This portion of the proposal allows the date shown by U.S. Postal Service
postmark to constitute proof of timely mailing of license taxes to any
municipal corporation or county in Missouri.
Livestock and poultry feed is currently exempt from sales tax, provided such
livestock and poultry feed, is used in the feeding of livestock and poultry
to be sold ultimately in processed form or at retail. This portion of the
proposal removes the requirement that livestock or poultry be sold ultimately
in processed form, or sold at retail, in order for livestock and poultry feed
to be exempt from sales tax requirements.
This proposal would exempt firebrick, electrodes and electrical or gas energy
from sales taxes for the production of glass products.
This proposal clarifies that replacement machinery and parts used in
manufacturing products to be sold for final use or consumption is exempt from
sales tax.
This portion of the proposal would give companies a 25% sales tax allowance
on energy used for recycling materials, destine for landfills, as part of
their raw material feedstock.
This proposal exempts lubricants used exclusively for farm machinery and
equipment, and sales of feed used in the commercial breeding of dogs from
state and local sales and use taxes.
This proposal exempts from state and local sales and use taxes all sales of
tire retreading or recapping equipment and supplies, tire carcasses, uncured
rubber, or sales of retreaded or recapped tires to any business which
retreads, recaps, or resells at retail any retreaded or recapped tires.
This proposal exempts from state and local sales and use taxes all sales of
pesticides or herbicides used in the production of crops, livestock, or
poultry.
All sales of non domestic gamebirds as defined and sold for purposes
specified in Section 144.048 RSMo, would be exempt and, all sales machinery,
equipment, and other tangible personal property required to conduct games of
bowling in bowling alleys where sales tax is collected on the gross receipts
of bowling games.
Transfers of motor vehicles, trailers, boats, or outboard motors within
corporations that have a license to operate as a motor vehicle or boat dealer
would not treat the sales as a sale at retail within the meaning of
subdivision (9) of subsection 1 of section 144.010 RSMo.
Section 144.025.1 has been amended by providing that for the purpose of
determining sales or use tax liability, a purchaser of a motor vehicle,
trailer, boat, or outboard motor would not be allowed to deduct from the
purchase price of the article, the actual allowance of any article other than
a motor vehicle, trailer, boat, or outboard motor. If the trade-in or
exchange allowance exceeds the purchase price there would be no sales tax
owed. This section would apply to motor vehicles, trailers, boats, or
outboard motors if the seller contracts to purchase a replacement motor
vehicle, trailer, boat, or outboard motor within one hundred eighty days
before or after the date of the sale of the original article. Current law
provides for the contract to purchase to have been made within ninety days.
For the purpose of Section 144.025 the term motor vehicle includes motor
vehicles, trucks, and trailers as defined in Section 301.010 RSMo., and
recreational vehicles as defined in Section 700.010.
Under this act, if a tax-exempt entity issues project exemption certificates
for the purchase of tangible personal property and materials which are
incorporated into or consumed in the construction of its project and the
entity is subsequently found not to have authority to issue such
certificates, or if the property and materials purchased are not related to
the entity's exempt functions and activities, the issuing entity shall be
liable for the tax owed on such personal property and materials.
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
St. Louis County
St. Louis City
City of St. Charles
City of Mexico
City of Poplar Bluff
This Fiscal Note is not an official copy and should not be quoted or cited.