SB 0047 - Fiscal Note

Fiscal Note - SB 0047 - Eliminates current requirement that textbooks be purchased at on-campus bookstore for sales tax exemption

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 0356-01

BILL NO.: SB 47

SUBJECT: Education, Higher; Revenue Dept.; Taxation and Revenue-General-Property

TYPE: Original

DATE: January 19, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($396,167) to ($560,547)	($494,416) to ($699,564)	($514,193) to ($727,547)
School District Trust	($132,056) to ($186,849)	($164,805) to ($233,188)	($171,398) to ($242,515)
Conservation	($16,507) to ($23,356)	($20,601) to ($29,148)	($21,425) to ($30,314)
Parks and Soil	($13,206) to ($18,685)	($16,481) to ($23,319)	($17,140) to ($24,252)
Total Estimated Net Effect on All State Funds	($557,936) to ($789,437)	($696,303) to ($985,219)	($724,156) to ($1,024,628)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 5 pages.

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	$0	$0	$0

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue (DOR) state this proposal expands the sales tax exemption on textbooks to off campus bookstores. Programming changes to the MITS/MOST systems would be necessary and can be addressed with present staff using overtime. DOR staff state 1 Computer Information Technician would be needed for ½ month at a cost of $3,713. Additionally, the Division of Taxation would request 1 clerk II for every 34,000 errors generated each year and 1 Tax Processing Technician for every 500,000 returns impacted each year. DOR staff does not anticipate that this exemption would generate those volumes, but if it does, or a combination of other exemptions in conjunction with this proposal does, DOR would request additional FTE.

Oversight assumes, for purposes of this fiscal note, that the Department of Revenue could handle the provisions of this proposal with existing staff and resources.

Officials of the Coordinating Board for Higher Education (CBH) state this proposal would remove the restriction on what bookstores may not charge state sales tax on textbooks bought by college students. CBH staff estimates that 5 to 10 percent of all true textbooks purchased by college students are purchased at a bookstore that is not on a college campus. According to the 1997-98 Statistical Summary of Higher Education there are approximately 157,394 full-time and 123,560 part-time students in Missouri institutions. CBH staff estimate assumes $600 per year for books for full-time students, and $300 per year for part-time students. CBH staff state that in addition to true textbooks being purchased by college students at off campus bookstores, CBH assumes that non-required books would be purchased also tax exempt. According to the 1997-98 Statistical Summary of Higher Education there are 280,954 full and part-time students in Missouri institutions. CBH estimates that an additional 10% should be added to reflect the students enrolled outside of Missouri who buy books in Missouri. CBH staff assumes that each student spends an average of $30 per year on non-required books. A 4% growth rate was used.

This proposal would result in a decrease in Total State Revenues.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Loss to General Revenue Fund
Off Campus Bookstores Sales Tax
Exemption for College Students	($396,167)	($494,416)	($514,193)
	to	to	to
	($560,547)	($699,564)	($727,547)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND	($396,167)	($494,416)	($514,193)
	to	to	to
	($560,547)	($699,564)	($727,547)
SCHOOL DISTRICT TRUST FUND
Loss to School District Trust Fund
Off Campus Bookstores Sales Tax
Exemption for College Students	($132,056)	($164,805)	($171,398)
	to	to	to
	($186,849)	($233,188)	($242,515)
ESTIMATED NET EFFECT ON
SCHOOL DISTRICT TRUST FUND	($132,056)	($164,805)	($171,398)
	to	to	to
	($186,849)	($233,188)	($242,515)
CONSERVATION FUND
Loss to Conservation Fund
Off Campus Bookstores Sales Tax
Exemption for College Students	($16,507)	($20,601)	($21,425)
	to	to	to
	($23,356)	($29,148)	($30,314)
ESTIMATED NET EFFECT ON
CONSERVATION FUND	($16,507)	($20,601)	($21,425)
	to	to	to
	($23,356)	($29,148)	($30,314)
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(Continued)	(10 Mo.)
PARKS AND SOIL FUND
Loss to Parks and Soil Fund
Off Campus Bookstores Sales Tax
Exemption for College Students	($13,206)	($16,481)	($17,140)
	to	to	to
	($18,685)	($23,319)	($24,252)
ESTIMATED NET EFFECT ON
PARKS AND SOIL FUND	($13,206)	($16,481)	($17,140)
	to	to	to
	($18,685)	($23,319)	($24,252)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	0	0	0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that their administrative costs from collecting sales taxes would be reduced.

DESCRIPTION

Current law exempts from state sales and use tax sales of textbooks if purchased at a

bookstore located on the premises of a postsecondary institution of higher learning. This act

allows the exemption of all textbook sales made by enrolled students regardless of location.

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

Coordinating Board for Higher Education

Jeanne Jarrett, CPA

Director

January 19, 1999