SB 0554 - Fiscal Note

Fiscal Note - SB 0554 - Removes sales tax on caskets and burial vaults

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2167-01

BILL NO. SB 554

SUBJECT: Taxation and Revenue-Sales and Use

TYPE: Original

DATE: December 30, 1997

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($1,829,014)	($2,812,108)	($2,882,411)
School District Trust	($609,671)	($937,369)	($960,804)
Conservation	($76,209)	($117,171)	($120,100)
Parks and Soil	($60,967)	($93,737)	($96,080)
Total Estimated Net Effect on All State Funds	($2,575,861)	($3,960,385)	($4,059,395)

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

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	($914,507)	($1,406,054)	($1,441,205)

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue (DOR) state this proposal would exempt the sale of coffins, caskets, burial cases and burial vaults from sales and use taxes.

DOR staff assume 80% of all taxable sales by funeral homes and crematories involve sales of the above items. Taxable sales for businesses in the SIC category "726-Funeral Service and Crematories" in FY 96 were $106,151,304. If it is assumed that 80% of these sales represent these items, the amount of taxable sales that would be exempted in FY 96 would be $84,921,043. 2.5% inflation is assumed.

Officials of the Office of Administration (COA) state according to the State Demographer in 1995, 54,222 residents of the state of Missouri died. The average price of a coffin is $1,500 and the average price of a burial case or burial vault is $1,000. It is assumed that a burial case or burial vault is required for a burial. This gives a cost of $2,500 per burial. Multiplying the number of deaths by the cost per burial gives $135,555,000 in sales. 3% inflation is assumed. Also for FY99 it is assumed that the exemption will not go into effect until October 1, 1998. This is because the law would go into effect August 28, 1998, and a one month lag is assumed. This gives eight months of fiscal impact in FY99.

The Office of Administration estimates would also include cremations and burial supplies which would be paid for by tax-exempt sources. Therefore, Oversight has elected to state costs consistent with DOR's estimates of taxable sales which would be exempted under this proposal.

Assuming eight months of fiscal impact in FY99.

This proposal would result in a decrease in Total State Revenues since Sales and Use Tax collections are included in the calculation of Total State Revenue.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(8 Mo.)
Loss - General Revenue Fund
Elimination of sales tax on Caskets,
Coffins and Burials Cases and Vaults	($1,829,014)	($2,812,108)	($2,882,411)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	($1,829,014)	($2,812,108)	($2,882,411)
SCHOOL DISTRICT TRUST FUND
Loss - School District Trust Fund
Elimination of sales tax on Caskets,
Coffins, Burial Cases and Vaults	($609,671)	($937,369)	($960,804)
ESTIMATED NET EFFECT ON
SCHOOL DISTRICT TRUST FUND	($609,671)	($937,369)	($960,804)
CONSERVATION FUND
Loss - Conservation Fund
Elimination of sales tax on Caskets,
Coffins, Burial Cases and Vaults	($76,209)	($117,171)	($120,100)
ESTIMATED NET EFFECT ON
CONSERVATION FUND	($76,209)	($117,171)	($120,100)
PARKS AND SOIL FUND
Loss - Parks and Soil Fund
Elimination of sales tax on Caskets,
Coffins, Burial Cases and Vaults	($60,967)	($93,737)	($96,080)
ESTIMATED NET EFFECT ON
PARKS AND SOIL FUND	($60,967)	($93,737)	($96,080)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(8 Mo.)
Loss to Cities
Elimination of sales tax on Caskets,
Coffins, Burial Cases and Vaults	($548,704)	($843,632)	($864,723)
Loss to Counties
Elimination of sales tax on Caskets,
Coffins, Burial Cases and Vaults	($365,803)	($562,422)	($576,482)
ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT	($914,507)	($1,406,054)	($1,441,205)

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 proposal exempts from state and local sales and use taxes all sales of coffins, caskets, burial cases, and burial vaults.

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

Office of Administration

Department of Revenue

Jeanne Jarrett, CPA

Director

December 30, 1997