(March 1, 2007) Associated Industries of Missouri (AIM) and the Taxpayers Research Institute of Missouri (TRIM) are pleased to announce House Bill 131, sponsored by Rep. Shannon Cooper (R-120, Clinton) cleared the House Rules Committee on February 28 and is now awaiting debate by the full Missouri House of Representatives. The bill would provide a sales tax exemption for all utilities, chemicals, machinery, equipment, and materials used or consumed in manufacturing, research and development of products in Missouri.
“Two years of hard work have brought us to this point, and we are hopeful the Missouri House and Missouri Senate will pass this top priority of the AIM Tax Committee,” said Ray McCarty, executive director of the Taxpayers Research Institute of Missouri and author of the legislation. “This legislation has the potential to help Missouri attract and retain manufacturing jobs in Missouri by eliminating a significant burden placed on our manufacturers through the taxation of manufacturing inputs – a burden already eliminated in other states that are fiercely competing for manufacturing jobs. We sincerely appreciate the hard work of the sponsor, Rep. Shannon Cooper, and his relentless efforts to help the manufacturing industry in Missouri,” said McCarty.
Under current Missouri law, electricity used in manufacturing is exempted from sales tax only if electrical costs exceed 10% of the cost of production or if the manufacturer uses raw materials with more than 25% recycled content. Manufacturers using gas must pay the full sales tax in Missouri. Most chemicals and other materials that are used in the manufacturing process but not included in the final product are also taxed in Missouri. Other states, including Kansas, exempt all such utilities, chemicals and materials.
The Taxpayers Research Institute of Missouri began the fight to exempt utilities used in manufacturing in November 2005 with a similar bill also sponsored by Rep. Cooper. Since then, AIM and TRIM have been working with legislators, state officials, leadership in the House and Senate and the governor’s office regarding the exemption and its potential benefit to the state. At the AIM Tax Conference in October, Taxpayers Research Institute listed this exemption as its top priority for the 2007 legislative session. In November 2006, the Missouri Supreme Court ruled some equipment used in research and development was subject to sales tax – equipment that manufacturers had long held to be exempt because it was used in the manufacturing process. The AIM Tax Committee voted to add research and development to the proposal and has since worked to obtain the support of other statewide business groups and state and local economic developers in the effort.
“If we all focus our collective efforts on this problem and work together, we will finally be able to eliminate the sales tax on all manufacturing inputs and help our Missouri manufacturers compete in the global economy,” said Gary Marble, president of Associated Industries of Missouri. “We urge lawmakers to make this the year we make Missouri manufacturing jobs a priority and pass this long-overdue exemption.”
Please write or call your legislators today and let them know you support HB 131 eliminating taxes on manufacturing inputs. To find your senator or representative, get your 9-digit ZIP code here and then click here. See our testimony on this bill posted below for information you may use in your email to your senator or representative. You may also contact Ray McCarty at rmccarty@aimo.com for more information.
