AIM objects to premise of governor’s press statement on HB 253

It appears House Bill 253, the broad-based tax cut plan of 2013 has a drafting error that can and should be fixed by the state legislature.

But that is not an excuse for Governor Nixon to veto the bill.

That’s the reaction of Associated Industries of Missouri president Ray McCarty, one of the main architects of the first business and personal income tax rate cut since the 1920’s.

On Thursday, Governor Nixon’s office issued a statement to the press that insinuated the legislation purposely repealed the exemption from sales tax of prescription drugs. McCarty says that’s far from the truth.

“We take exception to the premise of the governor’s press statement which is that the General Assembly intentionally passed language to repeal the sales tax exemption for prescription drugs,” said McCarty. “The language in question is language that we understood came from the governor’s own Department of Revenue, which assured us on many occasions that the language was correct.”

The language was part of the bill’s section on the Streamlined Sales Tax Compact. The exact same language was included in several bills, including a bill supported by the Department of Revenue’s own legislative liaison as he testified in favor of the bill during a House Ways and Means Committee hearing.

Upon further study, McCarty and Senator Will Kraus, the State Senate sponsor of House Bill 253, discovered that the Streamlined Sales Tax Compact does not go into effect until January 1, 2015, giving the legislature ample time next session to make the simple fix that is necessary.

Thursday, Senator Kraus’s office issued the following statement:

“This morning the governor issued a press release regarding the possible loss of exemption for prescription drugs in HB 253.  The section the governor refers to, 144.030, is part of the Streamlined Sales Compact language.  That exact language was recommended to me by the governor’s own Department of Revenue, and throughout the process officials at DOR assured me and others that the language was correct.

Upon further review, it looks as if removing the second reference to “over the counter” would easily fix the potential problem and leave the prescription drug exemption intact.  Since the streamline language, including the language in Section 144.030, does not take effect until January 1, 2015 (see Section B of HB 253) it can be fixed in the 2014 legislative session.

I urge the governor to sign HB 253 and provide broad-based tax relief to Missouri’s residents and businesses.”

McCarty says signing the bill is the best solution. He says he stands ready to help with any other problems that may arise next legislative session.

“We have the entire 2014 legislative session to fix this and any other problems that are sure to arise out of a couple hundred pages of legislative changes that were instituted by Governor Nixon’s Department of Revenue,” said McCarty. “We hope the Department will come forward with any other changes they feel are necessary so we may help them make changes.”

Governor Nixon received House Bill 253 Thursday morning following the technical adjournment of the 2013 legislative session. The bill not only includes tax cuts for every employer and taxpayer in the state, but it also includes important programs backed by the governor to help balance the state budget. Programs such as state tax amnesty, a strengthened nexus law to allow the Missouri Department of Revenue to more aggressively encourage interstate vendors to collect Missouri taxes on sales to Missouri residents, and a streamlining of our state and local sales tax laws.

“We hope the governor will not use a situation created by his Department of Revenue as a reason to veto this pro-taxpayer bill,” said McCarty. “The governor needs to sign this bill for the betterment of Missouri.”