The Missouri House Ways and Means Committee voted Monday to approve HB 2540 – major tax reform legislation which includes funding for Missouri’s deteriorating roads and bridges. The bill further advanced from a Rules committee on Thursday and will be eligible for discussion on the House floor, probably shortly following the legislative spring break.
This plan would cut the state’s personal and corporate income tax rates and increase driver’s license and registration fees.
House Speaker Pro Tem Elijah Haahr, R-Springfield, has proposed reducing the state’s highest personal income tax rate from 5.9 to 5 percent and cutting the corporate income tax rate from 6.25 to 5 percent. The bill would pay for these cuts by eliminating the current discounts allowed to retailers and employers to offset their costs of acting as income and sales tax collection agents for the state, phasing out a current deduction for income taxes paid by individuals and corporations, and forcing all companies to use the single sales apportionment formula. In addition, an income tax credit for property taxes paid through rent by low income and disabled people would be eliminated.
Haahr has opposed increasing the state’s gas tax and said his plan to raise registration fees will generate about $174 million annually for state infrastructure needs.
“We appreciate the sponsors of tax plans in both the House and Senate including funding for transportation,” said Ray McCarty, president/CEO of Associated Industries of Missouri and executive director of the Missouri Transportation and Development Council. “But there are significant drafting issues in both tax plans that we hope to address before any tax plan becomes law,” warned McCarty.
Both tax plans include language that seeks to allow Missouri to comply with the Streamlined Sales and Use Tax Agreement in order to collect up to $10 million voluntarily from internet retailers. The language required to make the necessary changes adds several hundred pages to each of the bills.
“We have found some errors and are confident there are more so we ask the sponsors to pull that language from their bills. Passing the bills as currently drafted would result in unintended tax increases and disruptions to our current sales and use tax collection process,” said McCarty.