HCS HB 768 -- TAX EXEMPTIONS

SPONSOR:  St. Onge

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Transportation by a vote of 7 to 1.

This substitute changes the laws regarding tax exemptions.  In
its main provisions, the substitute:

(1)  Authorizes a sales tax exemption on materials purchased by
contractors for use in the construction of highways and other
Department of Transportation projects;

(2)   Authorizes an exemption from the motor fuel tax for fuel
sold to school districts that is used by a bus driven to
transport students for educational purposes; and

(3)  Authorizes an exemption from the motor fuel tax for motor
fuel sold for use by an interstate transportation authority, a
city transit authority, or a city utilities board to operate
public mass transportation services.

The Department of Revenue will be required to establish a uniform
and simplified rule for all motor fuel tax exemptions.  This rule
must preempt all similar existing rules, minimize the time
between requesting and receiving a refund, and ensure that any
document and administrative burdens be kept to a minimum and be
shared equitably by the fuel wholesaler or retailer and the tax
exempt entity.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of
$17,836,500 in FY 2008, $12,870,000 in FY 2009, and $9,433,500 in
FY 2010.  Estimated Income on Other State Funds of $27,015,500 in
FY 2008, $17,925,000 in FY 2009, and $12,174,499 in FY 2010.

PROPONENTS:  Supporters say that Missouri material suppliers face
a l l/2 to 4% disadvantage against out-of-state competition due
to the differences in local taxes under Missouri laws.  Missouri
material suppliers pay the local tax rate based on the location
from where they ship material.  Out-of-state material suppliers
are required to pay local tax based on where the materials are
received in Missouri.  Often no local taxes are paid by out-of-
state companies selling materials for Missouri highway projects.
Approximately 25% of Missouri's 114 counties and 6% of Missouri's
1,395 cities that have a sales tax have enacted a use tax on
purchases from out-of-state vendors.  If materials for highway
projects are delivered from out-of-state suppliers to a location
outside of these local jurisdictions, there is no local tax
collected but an instate supplier has to pay an additional 7.225%
or more.  Even where counties or cities have enacted use taxes,
the total sales tax rate may be higher than the use tax rate.

Testifying for the bill were Representative Faith; Missouri
Chamber of Commerce and Industry; Associated General Contractors
of Missouri; Heavy Constructors Association of Greater Kansas
City; Department of Transportation; Associated Industries of
Missouri; and Missouri Limestone Producers Association.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:20 am