SB 0380 - Fiscal Note

Fiscal Note - SB 0380 - Exempts from sales and use tax tangible personal property purchased for use in research and experimentation activities

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1691-01

BILL NO.: SB 380

SUBJECT: Economic Development; Taxation and Revenue-General-Sales and Use

TYPE: Original

DATE: March 23, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($796,195)	($955,434)	($955,434)
School District Trust	($265,398)	($318,478)	($318,478)
Conservation	($33,175)	($39,810)	($39,810)
Parks and Soil	($26,540)	($31,848)	($31,848)
Total Estimated Net Effect on All State Funds	($1,121,308)	($1,345,570)	($1,345,570)

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 4 pages.

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	($398,097)	($477,717)	($477,717)

FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Economic Development (DED) state this proposal would not fiscally impact their agency.

Officials of the Department of Revenue (DOR) state this legislation provides a sales tax exemption for research or experimentation activities and defines a research or experimentation activity. It is not anticipated that the Department of Revenue would be impacted by this legislation, but the revenue impact would be an unknown loss to state and local sales tax funds.

According to the 1998 U.S. Statistical Abstract table No. 991, Missouri represents approximately 1.32% of R&D Industry expenditures. Table No. 1000 captures 1995 R&D Scientists and Engineers-Employment and Cost, by Industry. Using this data, Oversight estimates the taxable receipts of research and development in Missouri to be approximately $31,847,798 annually.

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

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
Loss to General Revenue Fund
Sales tax exemption for
Research and Experimentation	($796,195)	($955,434)	($955,434)
Loss to School District Trust Fund
Sales tax exemption for
Research and Experimentation	($265,398)	($318,478)	($318,478)
Loss to Conservation Fund
Sales tax exemption for
Research and Experimentation	($33,175)	($39,810)	($39,810)
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(Continued)	(10 Mo.)
Loss to Parks and Soil Funds
Sales tax exemption for
Research and Experimentation	($26,540)	($31,848)	($31,848)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
Loss to Cities
Sales tax exemption for
Research and Experimentation	($238,858)	($286,630)	($286,630)
Loss to Counties
Sales tax exemption for
Research and Experimentation	($159,239)	($191,087)	($191,087)
ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT	($398,097)	($477,717)	($477,717)
FISCAL IMPACT - Small Business
Small businesses could be impacted by this proposal

DESCRIPTION

This act defines, for purposes of sales and use tax, "research and experimentation activities" and then exempts from tax the sale of tangible personal property for use or consumption directly or predominantly in those activities.

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

Department of Economic Development

1998 Statistical Abstract of the United States

Jeanne Jarrett, CPA

Director

March 23, 1999