Gov. Jay Nixon says that House Bill 253 would increase taxes on Missourians who take prescription medication if it becomes law.
“An initial review has determined that the bill would eliminate the current sales tax exemption on prescription drugs and result in an estimated tax increase of $200 million annually,” Nixon said in a press release. “The out-of-pocket cost of prescription drugs, especially for those suffering from cancer, heart disease or other life-threatening conditions, already puts a strain on many Missouri families. That is why it is so troubling that House Bill 253 would repeal Missouri’s long-standing sales tax exemption on prescription drugs. If enacted, this provision would impose a $200 million sales tax hike on Missourians and increase the cost of the medications they need. This is a tax increase that Missourians cannot afford and don’t deserve.”
He says his staff continues to review the bill.
The legislature enacted the tax cut in 1979, allowing prescription drug costs and co-pays to be exempted from state sales tax. Nixon’s office says language in Section 144.030 of House Bill 253 would repeal that exemption, resulting in an estimated $200 million tax increase on Missourians who take prescription medication.
The Chamber of Commerce says the exemption wouldn’t be lifted until 2015, giving the legislature plenty of time to renew the provision and keep the exemption in place. The Chamber continues to hold its position that the tax-cut bill would be good for Missouri, and good for Missourians.
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The Governor has indicated he’ll veto legislation that would lower corporate business taxes, saying now is not the time to raise or lower taxes as Missouri’s economy steadily rebounds. The Missouri Chamber of Commerce disagrees.
Tracy King, who is the Chamber’s tax policy expert, says border wars with Kansas, Nebraska and Oklahoma show we need to create a business friendly climate to grow jobs.
“We’ve been looking at this for a couple of years to just help us to remain competitive,” she says.
King says the provision that would raise sales taxes was stripped from the bill, meaning consumers would only see an increase in their paychecks from the reduction of state income tax, but not take the hit while purchasing goods and services. She says the Chamber had concerns about a tax hike on consumers and were pleased to see that portion of the bill taken out before it was passed.
King says the bill would benefit individuals, small businesses and large corporations.
“There was the individual tax cut, so everyone across the state who pays income taxes will see a reduction in their income taxes, so everyone benefits,” she says, “And the corporate side was cut over ten years, so the rate goes down over a ten year period, and small business … don’t file their taxes on a corporate tax return, but are taxed on their individual tax return, they will see a reduction, and that reduction will be in the first five years, rather than waiting the full ten.”
She says because those protections were put in place, the bill is fiscally sound and does not run the risk of costing the state before cuts take effect.
The governor has until mid July to veto the bill, which amounts to a $700 million corporate and personal income tax, which Republicans are calling one of their biggest accomplishments this session.
Nixon disagrees. He says the changing the current tax formula would cause uncertainty, which would hinder economic growth, and any changes to the current system would threaten the state’s Triple-A credit rating. The Republicans have a veto-proof majority and could vote to overturn any of Gov. Nixon’s vetoes. The legislature will convene in September for veto session, which the Chamber anticipates will be very busy.
AUDIO: Jessica Machetta reports (:61)