HCS SB 981 -- SALES TAXES

SPONSOR:  Callahan (Sutherland)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 8 to 1.

This substitute changes the laws regarding city sales taxes and
state and local sales and use taxes.

CITY SALES TAXES (Sections 94.510, 94.550, and 94.577, RSMo)

Currently, under the general city sales tax law, cities may
impose a sales tax, upon voter approval, at a rate of one-half of
1%, seven-eighths of 1%, or 1%; and the City of St. Louis may
impose the tax at a rate not to exceed one and three-eighths
percent, for the benefit of the city.  The substitute specifies
that the combined rate of sales taxes adopted under the city
sales tax law cannot exceed 2%.  This change is not to be
construed as a new tax or an increase in the current levy of an
existing tax for the purpose of Article X, Section 22, of the
Missouri Constitution, commonly known as the Hancock Amendment,
which requires voter approval.  Cities that have already imposed
and collected taxes under the city sales tax law can continue to
do so without voter approval as a continuation of a tax
previously approved by the voters of the city.

Currently, under the capital improvements city sales tax law,
cities not in St. Louis County may impose a sales tax, upon voter
approval, at a rate of one-eighth, one-fourth, three-eighths, or
one-half of 1% for the purpose of funding, operating, and
maintaining capital improvements.  Municipalities in charter
counties are authorized to impose a capital improvements tax
under Section 94.890.  The substitute specifies that the combined
rate of sales taxes adopted under the capital improvement city
sales tax law cannot exceed 1%.  This change is not to be
construed as a new tax or an increase in the current levy of an
existing tax for the purpose of the Hancock Amendment which
requires voter approval.  Cities that have already imposed and
collected taxes under the city sales tax law can continue to do
so without voter approval as a continuation of a tax previously
approved by the voters of the city.

STATE AND LOCAL SALES AND USE TAXES

The substitute:

(1)  Authorizes the City of Kansas City to impose, upon voter
approval, a sales tax of one-eighth, one-fourth, three-eighths,
or one-half of 1% for public safety activities, including
operations and capital improvements, and for the retirement of
bonded indebtedness (Section 94.577);

(2)  Clarifies that certain purchases made for resale are not to
be considered as retail for sales and use tax purposes when the
subsequent sale is taxed in the state or another state, is for
resale, is excluded from tax, is subject to tax but is exempt, or
is exempt in another state where the subsequent sale occurs
(Section 144.018);

(3)  Clarifies that operators of amusement parks and places of
entertainment or recreation, including games or athletic events,
must charge sales taxes on the amount of gross receipts charged
for admission, but any subsequent sale of the admissions or
seating accommodations will not be subject to the taxes if it was
an arms length transaction for fair market value with an
unaffiliated entity and clarifies that operators of hotels,
motels, taverns, restaurants, drugstores, dining cars, tourist
camps, or other similar businesses must charge sales taxes on the
amount of gross receipts charged for all rooms, meals, and drinks
furnished at the establishment, but any subsequent sale of those
same rooms, meals, and drinks is exempt from sales and use taxes
if it was an arms length transaction for fair market value with
an unaffiliated entity (Section 144.018);

(4)  Authorizes a state and local sales and use tax exemption for
any sale of utilities at cost by a sports complex authority which
is ultimately consumed in the operation of a sports complex
leased to a professional sports team (Section 144.030);

(5)  Exempts from state use taxes certain business donations of
tangible personal property held as inventory given to a sales tax
exempt organization (Section 144.817);

(6)  Authorizes a state and local sales tax exemption for
gratuities, whether mandatory or voluntary, provided with the
receipt of property or services (Section 1); and

(7)  Removes the amount charged by a travel agent or an
intermediary from all hotel or motel local transient guest taxes
or local occupancy taxes (Section 2).

The substitute contains an emergency clause for the provisions
authorizing a sales tax exemption for gratuities and utilities
for sports teams, clarifying sales that are not to be considered
as retail for sales and use tax purposes, clarifying when certain
operators must charge sales taxes, and removing amounts charged
by a travel agent or intermediary.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of Unknown
exceeding $100,000 in FY 2011, FY 2012, FY 2013.  Estimated Cost
on Other State Funds of Unknown in FY 2011, FY 2012, and FY 2013.

PROPONENTS:  Supporters say that the bill allows the current
sales tax revenue in Kansas City to also be used for costs for
police officers if approved by the voters.

Testifying for the bill were Senator Callahan; and Greg Williams,
City of Kansas City.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:15 pm