Don't Tax FOOD!
September 2003 Update: This bill DID NOT PASS in the 2003 Legislative Session. In fact, it did not even receive a hearing by the House Tax Policy Committee.
The Don't Tax Food! 2003 proposal: This legislation would exempt food purchases from local sales tax and replace the resulting lost revenue to local governments.
Rep. Jenee Lowe, Kansas City (House District 44) and Rep. Bob Hilgemann, St. Louis (House District 64) were co-sponsors of House Bill 441 in the 2003 Session.
On March 6, the bill was assigned to the House Tax Policy committee. A hearing on the bill was never scheduled.
Members of the Tax Policy committee should hear from their constituents and others about the need to exempt food from local sales tax. It is not too early to let them know this is a proposal they should support. We will continue to work for this legislation ---for as long as it takes to get the job done.
Go to House Tax Policy Committe
* Retail sales of food are exempted from
local sales tax.
"Food" is defined the same as in the 1997 exemption
from the state three cents general sales tax: "those products
and types of food for which food stamps may be redeemed and shall
include food dispensed by or through vending machines."
* Revenue lost by counties and political
subdivisions (as a result of the exemption of the retail sales
of food from local sales tax) will be replaced by additional
revenue derived from a reduction of the federal income tax deduction
allowed on state tax returns. This revenue shall be deemed to
be local tax revenue. The amount of replacement revenue received
by the local government will be based on the amount produced
by their sales tax on food at the time this legislation is
enacted.
* The federal income tax (FIT) deduction
for the state individual income tax is reduced:
for single taxpayer's return,
from $5,000 at present, to $3,300;
for joint returns, from $10,000
at present, to $6,600.
This tax change will produce the revenue needed to replace
the dollars lost by local governments from the food tax exemption.
* A "Local Revenue Replacement Trust
Fund" is created. All additional revenues derived from this
bill's reduction of the federal income tax deduction must be
deposited in this fund by the state treasurer except for 2% of
the revenue which is designated for administrative costs. Disbursements
from this fund are made by the director of revenue to counties
and political subdivisions.
* Estimated Net Effect on General Revenue
Fund: There are NO additional costs to the state, except for
the initial costs in placing the measure on the ballot.
* Submission to the voters: At the general
election in November 2004 or at a special election called by
the governor.
* Effective Date of the Act: Upon approval
by a majority of the votes cast at the election.
The Income Tax change will be effective
January 1, 2005.
The Sales Tax on Food exemption will be effective
July 1, 2006.
Note: The
later effective date for the food tax exemption is to allow for
sufficient replacement funds to be accumulated prior to the loss
of revenue to local governments from this exemption.
Advantages of the Don't Tax Food!
Proposal
1. ALL Missourians will pay less in total
taxes if local sales taxes are taken off food through this proposal.
This is made possible by the interaction of the federal and state
income tax systems.
* Sales Taxes Paid are not
deductible on Federal Income Tax.
* State Income Tax Paid IS deductible on Federal
Income tax. This means that if a Missouri taxpayer has an increase
in the state income tax they pay, he/she gets a larger deduction
for this when he/she pays their federal income tax. Essentially,
the federal government picks up a significant portion of the
state income tax increase paid.
2. Local governments will NOT have a loss
of revenue.
This bill will prevent our cities and counties from losing funds
from the food tax exemption.
3. No Missouri taxpayer will have a net
increase in their tax burden.
It will help ALL Missourians to be rid of this unfair tax on
a basic necessity for life.
4. There is no loss of STATE REVENUE. After
the initial negligible costs for placing the measure on the ballot,
previous fiscal notes for this legislation show that the state
general revenue fund will even have a small increase.
5. The VOTERS will have the final say,
since this measure will be placed on the ballot for final enactment.
Citizens must work to convince legislators
that
FOOD SHOULD NOT BE TAXED!