At Tuesday’s hearing of the House Ways and Means Committee, Associated Industries of Missouri president Ray McCarty testified that although AIM may support the goal of the legislation, a 150+ page bill that would tax internet sales contains many flaws and AIM is opposed to the bill.
HB 1721, sponsored by Rep. Margo McNeil (D-69), would implement the Streamlined Sales Tax Project in Missouri. While the bill sponsor’s intentions to level the tax differences between main street retailers and online retailers are good goals, the numerous changes that are necessary to bring Missouri’s sales and use tax law in line with the multi state standard lead to many opportunities for mistakes.
McCarty will cite a few specific examples of problems in his testimony, including: 1. Removal of sales tax exemptions for computer output; 2. Expanding the definition of “seller” to include all service providers (currently only taxable service providers are included); 3. Prescription drugs that are furnished to patients as samples are exempt under current law but not under the bill; 4. Sales of over-the-counter drugs to individuals with disabilities are exempt under current law, but taxable under the bill; 5. The bill would apply state and local sales taxes to federal excise taxes on aviation fuel; 6. Medical oxygen is exempt from sales tax now but would appear to be taxable under the bill; and, 7. Devices such as electronic print enlargers and magnifiers, and reading machines that are not defined as “durable medical equipment” would be taxable under the bill, but are exempt under current law.
These problems were found after a relatively short review of the bill, leaving us to wonder how many more errors exist in the legislation. After Governor Nixon’s well publicized veto of our tax cut bill that contained this proposal last session, we want to be very careful to avoid mistakes.
“This bill is a reckless experiment in internet taxation and the disabled and other taxpayers of the state would be the victims of unintended consequences of this massive tax bill,” said Ray McCarty, president of AIM.