COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:5974H.06C Bill No.:HCS for SS for SCS for SB Nos. 3 & 5 Subject:Taxation and Revenue - General; Taxation and Revenue - Income Type:Original Date:September 28, 2022Bill Summary:This proposal modifies provisions relating to taxation.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2034)
General Revenue
($142,134,038-
$149,797,373)
($535,522,237 -
$550,384,288)
($748,223,931 -
$763,085,982)
Could exceed
($1,105,721,159-
$1,120,583,210)
Total Estimated
Net Effect on
General
Revenue
($142,134,038-
$149,797,373)
($535,522,237 -
$550,384,288)
($748,223,931 -
$763,085,982)
Could exceed
($1,105,721,159-
$1,120,583,210)
*Oversight notes currently the state individual income tax rate (5.3% in CY 2022) is to be
reduced in 0.10% annual increments (if certain triggers are met) until it reaches 4.8%. This
proposal would change the tax rate to 4.95% starting January 1, 2023. This proposal also allows
for an additional 0.15% GR-growth-dependent reduction in CY 2024 to 4.8%. Additionally, this
proposal allows for an additional three 0.1% GR-growth-dependent reductions that could occur
as early as CY 2025 (assuming the GR dependent trigger was met) until it reaches 4.5%. The
impact for FY 2023 is smaller because it reflects a partial year. The fiscal note reflects the
assumptions that the current triggers would have been met each year (would have reduced the
rate to 4.8% regardless of this bill) and that the additional triggers in the bill will be met each
year, occurring in CY 2024 – CY 2027.
** Currently, an income tax is imposed on the taxable income of corporations at a rate of 4%.
This proposal allows two corporate tax collection growth-dependent reductions of the corporate
income tax to be reduced in 1% increments beginning January 1, 2024. Additionally, this
proposal allows for eight additional 0.25% corporate tax collection-growth-dependent reductions
until the corporate tax is eliminated. The fiscal note reflects the assumption that the triggers
in the bill will be met each year, occurring in CY 2024 – CY 2031.
Numbers within parentheses: () indicate costs or losses. L.R. No. 5974H.06C
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ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2034)
Total Estimated
Net Effect on
Other State
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2034)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2034)
Total Estimated
Net Effect on
FTE 0000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act. L.R. No. 5974H.06C
Bill No. HCS for SS for SCS for SB Nos. 3 & 5
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ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2034)
Local
Government$0$0 ($13,198,166)($52,792,665)
*Oversight notes per Section 148.720, whenever there is a reduction in the corporate tax rate
there shall be a proportional decrease in the financial institutions tax. Oversight further notes that
the financial institutions tax is distributed to GR (2%) and local funds (98%) on an annual basis
and that tax payments for tax year 1 are distributed in FY2.
FISCAL ANALYSIS
ASSUMPTION
Due to time constraints, Oversight was unable to receive agency responses in a timely
manner and performed limited analysis. Oversight has presented this fiscal note on the best
current information that we have or on information regarding a similar bill(s). Upon the
receipt of agency responses, Oversight will review to determine if an updated fiscal note
should be prepared and seek the necessary approval to publish a new fiscal note.
Oversight notes this proposal contains a Section B with an effective date for a designated
section (143.011). That section would go into effect on January 1, 2023.
Oversight notes this proposal contains an emergency clause (Section C) that would make this
proposal effective upon signing by the Governor for section 143.021. For the simplicity of the
fiscal note, we will assume this provision would go into effect on October 1, 2022. Oversight
notes the provisions in section 144.016 begin on January 1, 2023. This section will not be
effected by the emergency clause.
Section 135.333 Adoption Tax Credit Refund
Oversight notes Section 135.333, specifically states that “for tax years beginning on or after
January 1, 2023, any amount of tax credit that is issued and which exceeds the tax due shall be
refunded to the taxpayer.”
Oversight notes, currently, pursuant to Section 135.327, the tax credit program has a cumulative
cap of $6,000,000 for all fiscal years beginning on or after July 1, 2021 (Fiscal Year 2022). L.R. No. 5974H.06C
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Oversight assumes redemptions in the tax credit program pursuant to Section(s) 135.325,
135.326, 135.327 and 135.335 could increase as a result of the reduced/lessened requirements
needed to qualify for the tax credit.
As stated above, Oversight notes all modifications to the tax credit program pursuant to
Section(s) 135.325, 135.326, 135.327, and 135.335 (except for the increase in the cumulative
cap) will begin January 1, 2022. Oversight notes tax returns for Tax Year 2022 will not be filed
until after January 1, 2023 (Fiscal Year 2023).
Oversight notes that DOR’s information regarding the history of redemption of this tax credit
under the program reflected annual redemption totals of $52,200 in 2018 to 2020 period
($19,185 in 2019, $29,404 in 2020 and $3,611 in 2021). Oversight will assume, for purpose of
this fiscal note and given all above changes to the tax credit structure, the amount of loss would
be less than $100,000 annually.
Sections 143.011 – 143.021 Individual Income Tax Rate
In response to a previous version of this bill, officials from the Department of Revenue (DOR)
noted in 2013 Missouri’s individual income tax rate was 6% per the tax tables printed in statutes.
In 2014, SB 509 then allowed for five reductions of the individual income tax rate based on
certain revenue triggers (Section 143.011.2). The Department notes that currently three of those
reductions have occurred (TY 2018, TY 2019 and TY 2022) and the fourth is forecasted to
happen in tax year 2023, which will set the rate at 5.2%.
Additionally, in 2019, HB 2540 was added to statues that caused the individual income tax rate
to be decreased by four-tenths of one percent (Section 143.011.3). Then during the 101
st
General
Assembly regular session SB 153 & 97 was passed that would allow starting in tax year 2024
another two reductions of SB 509 (Section 143.011.4). Therefore, as of the filing of the fiscal
note the individual income tax rate for tax year 2022 is 5.3% and the tax rate scheduled for tax
year 2023 is 5.2%.
This proposal in Section 143.011.2 adds language that would lower the individual income tax
rate to 4.95% starting January 1, 2023. This proposal would then allow for another fifteen
hundreds of a percent reduction in the individual income tax rate starting January 1, 2024 if a
certain trigger is met. A reduction in the rate of tax shall only occur if the amount of net general
revenue collected in the previous fiscal year exceeds the highest amount of net general revenue
collected in any of the three fiscal years prior to such fiscal year by at least one hundred seventy-
five million dollars.
Starting after the two previous reductions, this proposal will allow three additional reductions of
one-tenth of one percent reductions in the individual income tax rate. No more than one
reduction can be made annually and will only occur if three triggers are met. A reduction in the
rate of tax shall only occur if: L.R. No. 5974H.06C
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a. The amount of net general revenue collected in the previous fiscal year exceeds the
highest amount of net general revenue collected in any of the three fiscal years prior to
such fiscal year by at least two hundred million dollars; and
b. The amount of net general revenue collected in the previous fiscal year exceeds the
amount of net general revenue collected in the fiscal year five years prior, adjusted by the
percentage increase in inflation over the preceding five fiscal years.
(b) The amount of net general revenue collected required by subparagraph a of paragraph (a) of
this subdivision in order to make a reduction pursuant to this subsection shall be adjusted
annually by the percent increase in inflation beginning with the effective date of this section.
This proposal also adds language that starting January 1, 2023, eliminates the current lowest tax
bracket. This would make the lowest bracket start at $1,000 instead of $100.
For fiscal note purposes only, the Department shows the individual income tax reductions
occurring in consecutive years. Using the Department’s internal Income Tax Model that contains
confidential taxpayer data, DOR was able to estimate the following impact of these new changes
starting in tax year 2023.
Tax
YearAmount
2023($309,618,774)2024($367,313,334)2025($369,576,908)2026($368,358,203)2027($370,662,102)
The Department uses a 42%/58% split when converting from tax years to fiscal years.
Fiscal
YearLoss to GR
2023($130,039,885)2024($333,850,489)2025($368,264,035)2026($369,065,052)2027($369,325,840)2028($370,662,102)
This proposal will require computer upgrades, form changes and website changes. This is
estimated at $10,000 in one-time costs. L.R. No. 5974H.06C
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Oversight notes that DOR assumes this proposal will require programming changes estimated to
cost $10,000. Oversight
handle a certain amount of activity each year. Oversight assumes DOR could absorb the costs
related to this proposal. If multiple bills pass which require additional staffing and duties at
substantial costs, DOR could request funding through the appropriation process.
In response to a previous version of this bill, officials from the Office of Administration -
Budget and Planning (B&P) note Section 143.011 would reduce the top tax rate to 4.95%
beginning with tax year 2023. This would also create an additional rate reduction of 0.15% as
early as tax year 2024, depending on net general revenue growth. In order to trigger this
reduction, net general revenue must grow by $175 million over the largest of the three previous
fiscal years.
In addition, as early as tax year 2025 three additional 0.1% reductions may occur, depending on
net general revenue growth. In order to trigger these reductions, net general revenue must grow
by at least $200 million, adjusted for inflation, over the highest of the three previous fiscal years
and net general revenue must be greater than the five-year inflation adjusted net general revenue.
Section 143.021 would eliminate the bottom individual income tax bracket.
B&P notes that under current law the top tax rate will be 5.2% starting with tax year 2023. B&P
notes that per SB 153 (2021) there will be a 0.1% reduction in the top rate for tax year 2024.
Based on current revenue forecasts and average revenue growth, B&P estimates that revenues in
FY24, FY25, and FY26 will reach the growth trigger requirement for reductions to the top rate of
tax. Therefore, the top rate of tax is estimated to be reduced by 0.1% in tax years 2025, 2026,
2027 under SB 509 (2014) and SB 153 (2021). For the purpose of this fiscal note, B&P will
assume that the rate reductions created under this proposal will trigger for each tax year from
2024 through 2027. However, B&P acknowledges that it is unlikely that the reductions will
trigger in consecutive years. Table 1 shows the current versus proposed top rate of tax.
Table 1: Current versus
Proposed Top Tax Rate
Tax
Year
Current
LawProposed
20235.20%4.95%20245.10%4.80%20255.00%4.70%20264.90%4.60%20274.80%4.50%
Using tax year 2019 data, the most recent complete tax year available, and accounting for the
changes in individual income tax law created by SB 509 (2014) and SB 153 (2021), B&P
estimates that this proposal may reduce tax collections by $311.0M in tax year 2023. Once this L.R. No. 5974H.06C
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proposal fully implements, B&P estimates this provision could reduce tax collections by
$371.2M annually, compared to revenues under SB 509 (2014) and SB 153 (2021) with a top
rate 4.8%. Table 2 shows the estimated revenue impact by tax year.
Table 2: Estimated
Impact by Tax Year
Tax
YearGR Impact
2023($311,033,037)2024($369,130,762)2025($371,418,054)2026($370,204,431)2027($371,230,602)
However, because this proposal would take effect January 1, 2023, individuals will adjust their
withholdings and declarations during FY23. Based on actual collections data, B&P estimates
that 42% of individual income taxes are paid during fiscal year 1 and 58% are paid during fiscal
year 2. Therefore, B&P estimates that this provision could reduce TSR and GR by $130.6M in
FY23. Once fully implemented, and annually thereafter, this proposal may reduce TSR and GR
by $371.2M, compared to revenues under SB 509 (2014) and SB 153 (2021) with a top rate
4.8%. Table 3 shows the estimated impact by fiscal year.
Table 3: Estimated Impact
by Fiscal Year
Fiscal
YearGR Impact
2023($130,633,876)2024($335,434,081)2025($370,091,425)2026($370,908,333)2027($370,635,423)2028($371,230,602) L.R. No. 5974H.06C
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Oversight notes that under the current law, SB 509 (2014) and SB 153 (2021) allows
for a top rate of 4.8% to be established by CY 2027, as shown below.
Oversight notes that this proposal reduces the top individual income tax rate to
4.95% beginning with the 2023 calendar year. This proposal allows an additional
0.15% GR-growth-dependent reduction in calendar 2024 to 4.8%. Finally, Oversight
notes this proposal
after the State reaches the 4.8% tax top rate. Each year, for purpose of this fiscal
note, the additional trigger would be met to show the greatest impact to the general
revenue as shown below:
Tax
Year
Current
Law
Proposed
LawEffect
20235.20%4.95%Proposed top individual income tax rate
20245.10%4.80%
Proposed fifteen hundredths of a
percent reduction
20255.00%4.70%
Proposed one-tenth of a
Percent reduction (Dependent on GR growth)
20264.90%4.60%
Proposed one-tenth of a
Percent reduction (Dependent on GR growth)
20274.80%4.50%
Proposed one-tenth of a
Percent reduction (Dependent on GR growth)
Oversight notes both DOR and B&P’sestimates include data from DOR and B&P’s internal
Income Tax Model. Additionally, Oversight notes both DOR and B&P’s estimates of revenue
impact assume all scheduled rate reductions will occur.
Oversight notes that it does not currently have the resources and/or access to state tax data to
produce a thorough independent revenue estimate and is unable to verify the revenue estimates
provided by B&P and DOR. Therefore, for the purpose of this fiscal note, Oversight will note
B&P’s estimated impact for this proposal.
Section 143.071 Corporate Income Tax Rate Reductions
Oversight notes the corporate tax rate is currently 4%. According to the DOR, the FY 2022 net
corporate tax collections were $711.1M. Oversight is unable to determine when these reductions
will occur. For the simplicity of the fiscal note, Oversight will assume these reductions will
trigger consecutively as shown in the table below: L.R. No. 5974H.06C
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Fiscal
Year
Corporate
Tax Rate
Corporate Tax CollectionsAnnual Loss20234.00 $ 711,100,000 $ - 20243.00 $ 533,325,000 $ (177,775,000)20252.00 $ 355,550,000 $ (355,550,000)20261.75 $ 233,329,688 $ (477,770,313)20271.50 $ 133,331,250 $ (577,768,750)20281.25 $ 72,915,527 $ (638,184,473)20291.00 $ 33,332,813 $ (677,767,188)20300.75 $ 13,671,661 $ (697,428,339)20300.50 $ 4,166,602 $ (706,933,398)20310.25 $ 854,479 $ (710,245,521)20320.00 $ - $ (711,100,000)
Oversight notes that the financial institution tax is paid annually in the fiscal year following the
end of a calendar year. According to DOR, in FY22, financial institutions tax collections were
$53,870,066 at a tax rate of 4.48%. Per Section 148.720 whenever there is a reduction in the
corporate tax rate, there shall be a proportional decrease in the financial institutions tax.
Oversight further notes that the financial institutions tax is distributed to GR (2%) and local
funds (98%) on an annual basis and that tax payments for tax year 1 are distributed in FY2.
Oversight estimates the impact to general revenue and local funds in the table below:
2%98%Fiscal YearLossGRLocals2023 $ - $ - $ - 2025 $(13,467,517) $(269,350) $(13,198,166)2026 $(26,935,033) $(538,701) $(26,396,332)2027 $(30,301,912) $(606,038) $(29,695,874)2028 $(33,668,791) $(673,376) $(32,995,415)2029 $(37,035,670) $(740,713) $(36,294,957)2030 $(40,402,550) $(808,051) $(39,594,499)2031 $(43,769,429) $(875,389) $(42,894,040)2032 $(47,136,308) $(942,726) $(46,193,582)2033 $(50,503,187) $(1,010,064) $(49,493,123)2034 $(53,870,066) $(1,077,401) $(52,792,665)
Section 144.016 Diapers and Feminine Hygiene Products Reduced Sales Tax Rate
In response to a similar proposal (HB 2272 - 2022), officials from the Department of Revenue
(DOR) DOR noted that the average child wears diapers for three years before becoming fully L.R. No. 5974H.06C
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toilet trained. DOR found the price of diapers vary from $0.20 per diaper for generics to $0.42
for name brand. Prices of diapers also depend on the size of the diaper. Estimates by various
children’s organizations indicate that an infant in the first year of life goes through 2,500 diapers.
The next two years as toddlers they go through 1,500 diapers annually.
Wearing DiaperHow Many
Low Price per
Diaper
High Price
per Diaper
Total Cost
Low
Total Cost
High
First Year (Size 1)2,5000.200.27500675Second Year (Size 3)1,5000.300.41450615Third Year (Size 5)1,5000.320.42480630
Based on the Department of Health and Senior Services, the average number of resident births
from 2017- 2019 was 72,800. Given that 3 years’ worth of children are wearing diapers in any
one year (1 set of infants and 2 sets of toddlers), DOR estimates the following:
Births Annually72,800# of kids in Diapers
Annually218,400
# of Diapers
Annually
infant182,000,000 toddler (2yrs)218,400,000 total (kids *
diapers)400,400,000
DOR calculated the difference in the current amount paid in sales tax (4.225%) to the proposed
amount (1.225%). DOR assumes this would eliminate the 3% General Revenue portion of the
state sales tax.
Tax Rate
Low Price Tax
Collected
High Price
Tax Collected
Taxable Sales 104,104,000139,776,000Current Rate4.225%4,398,3945,905,536Proposed Rate1.225%1,275,2741,712,256Difference 3,123,1204,193,280
This proposal is to start as of October 1, 2022. For three months in FY 2023, the tax will
continue to be collected. This would result in a loss to general revenue: L.R. No. 5974H.06C
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Fiscal YearLow ImpactHigh ImpactFY 2023 (9
month )($2,342,340)($3,144,960)
FY 2024($3,123,120)($4,193,280)FY 2025($3,123,120)($4,193,280)
Adult Diapers
DOR notes approximately one third of adults age 65 and older have moderate to severe urinary
incontinence and 6 percent had moderate to severe bowl incontinence. According the United
State Census Bureau 2019 population report, 1,057,943 individuals residing in Missouri were 65
or over. The Department notes that it is estimated that people with minor to moderate
incontinence wear approximately 4 diapers per day while those with those with full urinary or
fecal incontinence wear 6 diapers per day. The Department estimates that approximately
285,645 individuals aged 65 and over would utilize the four adult urinary incontinence diapers
while 63,477 would wear 6 adult diapers daily.
The average cost for urinary incontinence diapers is $1.31 per diaper.
Number of
people
# of
Diapers
Days per
year
Total
Diapers
per person
Price per
diaperTotal Sales
285,645436514601.31546,323,88163,477636521901.31182,107,960 728,431,841
DOR calculated the difference in the current amount paid in sales tax (4.225%) to the proposed
amount (1.225%). DOR assumes this would eliminate the 3% General Revenue portion of the
state sales tax.
Tax Rate Tax CollectedCurrent Rate3.00%21,852,955Proposed Rate1.00%7,284,318Difference 14,568,637
DOR assumes this proposal would become effective October 1, 2022. Therefore, there will be
three months of tax collected in FY 2023 before the products become exempt. DOR will show 9
months of impact in FY 2023. L.R. No. 5974H.06C
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Fiscal YearImpactFY 2023
(9months)
($10,926,478)FY 2024($14,568,637)FY 2025($14,568,637)
Feminine Hygiene Products
Information from numerous sources indicates that a woman menstruates 500 times in her
lifetime, usually between the ages of 13-51. The average length of a period is 3-7 days. Sources
indicate that a woman uses the following:
Number per cycleNumber per yearNumber in BoxBoxes per yearTampons20260367.22Pads/Panty Liners565361.81
DOR notes a woman has 13 cycles a year (28 day cycle)/352 days a year. The price per tampons
and pads vary. DOR used a low and high price when determining the fiscal impact.
Price LowPrice HighTotal Cost LowTotal Cost HighTampons$7.00 $10.00 $50.56 $72.22 Pads/Panty Liners$7.00 $10.00 $12.64 $18.06 $63.19 $90.28
Using information from the US Census Bureau (2019 ACS 5 year estimates), DOR calculated
the number of women having a period in Missouri (those between 13 and 51) as 1,515,420.
Total Cost LowTotal Cost HighTotal estimated cost per year$95,766,125$136,808,750GR Portion$2,872,984$4,104,263
This proposal begins October 1, 2022 (FY 2023). DOR will show a lesser loss to Fiscal Year
2023 because there are three months in Fiscal Year 2023 in which feminine products would
remain applicable to have the full amount of state sales tax collected. This would result in the
following loss:
LowHighFY 2023 (9months)($2,154,738)($3,078,197)FY 2024($2,872,984)($4,104,263)FY 2025($2,872,984)($4,104,263) L.R. No. 5974H.06C
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DOR noted this would require one-time computer programming and form changes. This is
estimated to cost $7,192.
Oversight notes the Department of Revenue expects programming upgrades at an estimated cost
of $7,192. Oversight assumes DOR is provided with core funding to handle a certain amount of
activity each year. Oversight assumes the DOR could absorb the costs related to this proposal. If
multiple bills pass which require additional staffing and duties at substantial costs, the DOR
could request funding through the appropriation process.
In response to a similar proposal (HB 2272 - 2022), officials from the Office of Administration
- Budget and Planning(B&P) noted this provision would reduce the state sales tax rate for
feminine hygiene products and diapers from the current rate of 4.225% to the same rate as the
levy on food beginning October 1, 2022. B&P notes that the state levy on food is equal to
1.225% and does not include the 3% tax that would otherwise be deposited into GR.
Diaper (Child) Sales Tax Reduction
Based on research, B&P found that the average amount spent on diapers was $550 to $840 per
year. Based on information from the University of Michigan Hospital, the average age until
children are toilet trained is 2.5 years. Based on information provided by the United State
Census 2019 population estimates (the most recent complete year available), there were
approximately 217,232 children living in Missouri ages 0-2 years old.
Therefore, B&P estimates total sales of $119,477,600 (217,232 children x $550) up to
$182,474,880 (217,232 children x $840) may be impacted by this proposal. B&P estimates that
eliminating the GR portion of the state sales tax, would reduce TSR and GR by $3,584,328 to
$5,474,246 annually.
Diaper (Adult) Sales Tax Reduction
According to research completed by the CDC, approximately 25% of adults age 65 and up had
moderate to severe urinary incontinence and 8% had moderate to severe bowel incontinence.
B&P notes that according the United State Census 2019 population (the most recent complete
year available) estimates there were approximately 1,062,037 individuals residing in Missouri
age 65 and over.
Based on these numbers, B&P estimates that approximately 265,509 individual age 65 and over
would utilize adult urinary incontinence diapers. B&P further estimates that approximately
84,963 individuals residing in Missouri age 65 and over would utilize adult bowel incontinence
diapers.
Based on information from a budgeting website, the average cost for urinary incontinence
diapers is $160 to $240 per month, for a yearly cost of $1,920 to $2,880. Further information
from the budgeting website lists the average monthly bowel incontinence diapers is $60 to $180
per month, for a yearly cost of $720 to $2,160. L.R. No. 5974H.06C
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B&P estimates that total annual sales for urinary incontinence adult diapers would be
approximately $509,777,760 (265,509 people x $1,920 annual cost) up to $764,666,640 (265,509
people x $2,880 annual cost).
B&P further estimates that the total annual sales for bowel incontinence adult diapers would be
$61,173,331 (84,963 people x $720 annual cost) up to $183,519,994 (84,963 people x $2,160
annual cost).
Therefore, B&P estimates total sales of $570,951,091 ($509,777,760 + $61,173,331) up to
$948,186,634 ($764,666,640 + $183,519,994) may be impacted by this proposal. B&P estimates
that eliminating the GR portion of the state sales tax, would reduce TSR and GR by $17,128,533
to $28,445,599 annually.
Feminine Hygiene Products
Based on information from multiple sites, B&P estimates that women purchase an average of 6.8
to 7.2 boxes of tampons and 1.7 to 1.8 boxes of pads and liners per year (using the average cycle
length of 28 to 30 days), with an average price of $7 to $10 per box. B&P was also able to
determine that the average age for menstruation is 12-51, and based on data provided by the
United State Census 2019 population estimates (the most recent complete year available), there
are approximately 1,549,453 woman between those ages residing in Missouri.
Therefore, B&P estimates total sales of $91,622,359 to $140,238,305 may be impacted by this
proposal. B&P estimates that reducing the sales tax rate on feminine hygiene products from
3.225% to 1.225% will reduce TSR and GR by $2,748,671 to $4,207,149 annually.
Summary
B&P estimates that this proposal may reduce TSR and GR by $17,596,149 to $28,595,246 in
FY23. Once fully implemented in FY24, this proposal may reduce TSR and GR by $23,461,532
to $38,126,995 annually. Table 1 shows a summary of the estimated impact on TSR by sales tax
exemption.
Table 1: Loss to GR by ExemptionState FundFY23FY24General RevenueLowHighLowHighDiapers - Child($2,688,246)($4,105,685)($3,584,328)($5,474,246)Diapers - Adult($12,846,400)($21,334,199)($17,128,533)($28,445,599)Feminine Hygiene Products($2,061,503)($3,155,362)($2,748,671)($4,207,149)Total GR Loss($17,596,149)($28,595,246)($23,461,532)($38,126,995)
Oversight notes both DOR & B&P assumed this proposal will have a negative fiscal impact to
state funds. Oversight notes DOR and B&P’s estimated impacts for FY 2023 were estimated
under an assumed effective date of October 1, 2022. Oversight has adjusted the FY 2023
estimates to reflect this proposal’s start date of January 1, 2023 (FY 2023 impact of 6 months). L.R. No. 5974H.06C
Bill No. HCS for SS for SCS for SB Nos. 3 & 5
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September 28, 2022
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Oversight will show B&P’s and DOR’s lowest and highest projected fiscal estimates to show the
minimum low and maximum high impact of this proposal with the adjusted amount for FY 2023.
Oversight notes the Park, Soil, and Water Sales Tax funds are derived from the one-tenth of one
percent sales and use tax pursuant to Article IV Section 47 (a) thus DNR’s sales taxes are
constitutional mandates. Oversight notes this proposal would reduce the tax rate from 4.225% to
1.225% on diapers, feminine hygiene products and incontinence products. Therefore, it would
allow DNR to retain their current funding and would be a loss only to General Revenue of its
3%.
Oversight notes that the Conservation Sales Tax funds are derived from one-eighth of one
percent sales and use tax pursuant to Article IV Section 43 (a) of the Missouri Constitution thus
MDC=s sales taxes are constitutional mandates. Oversight notes this proposal would reduce the
tax rate from 4.225% to 1.225% on diapers, feminine hygiene products and incontinence
products. Therefore, it would allow MDC to retain their current funding and would be a loss
only to General Revenue of its 3%. L.R. No. 5974H.06C
Bill No. HCS for SS for SCS for SB Nos. 3 & 5
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September 28, 2022
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FISCAL IMPACT –
State Government
FY 2023
(6 Mo.)
FY 2024FY 2025Fully
Implemented
(FY 2034)
GENERAL
REVENUE FUND
Revenue Reduction
- §135.333–
Refundable
Adoption Tax Credit
p. 3-4
Less than
($100,000)
Less than
($100,000)
Less than
($100,000)
Less than
($100,000)
Revenue Loss -
§143.011 - §143.021
Individual Income
Tax p. 4-8($130,633,876)($335,434,081)($370,091,425)($371,230,602)
Revenue Loss -
§143.071 – Changes
to Corporate Tax p.
8-9 $0 ($177,775,000)($355,550,000)
Could exceed
($711,100,000)
Revenue Loss -
§143.071
(§148.720)–
Changes to
Financial
Institutions Tax p.
8-9 $0$0 ($269,350) ($1,077,401)
Revenue Reduction
- §144.016 -
Reduction
of sales tax rate on
child diapers p.9-14
($1,561,560 -
$2,737,123)
($3,123,120 -
$5,474,246)
($3,123,120 -
$5,474,246)
Could exceed
($3,123,120 -
$5,474,246)
Revenue Reduction
- §144.016 -
Reduction
of sales tax rate on
adult diapers p. 9-14
($8,564,267)-
$14,222,799)
($17,128,533 -
$28,445,599)
($17,128,533 -
$28,445,599)
Could exceed
($17,128,533 -
$28,445,599) L.R. No. 5974H.06C
Bill No. HCS for SS for SCS for SB Nos. 3 & 5
Page 17 of 18
September 28, 2022
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Revenue Reduction
- §144.016 -
Reduction
of sales tax rate on
feminine hygiene
products p. 9-14
($1,374,335)-
$2,103,575)
($2,061,503-
$3,155,362)
($2,061,503-
$3,155,362)
Could exceed
($2,061,503-
$3,155,362)
ESTIMATED NET
EFFECT ON
GENERAL
REVENUE FUND
($142,134,038-
$149,797,373)
($535,522,237 -
$550,384,288)
($748,223,931 -
$763,085,982)
Could exceed
($1,105,721,159-
$1,120,583,210)
FISCAL IMPACT
– Local
Government
FY 2023
(10 Mo.)
FY 2024FY 2025Fully
Implemented
(FY 2034)
LOCAL
POLITICAL
SUBDVISIONS
Revenue Loss -
§148.720
(§143.071) –
Decrease of
financial
institutions tax
p. 10-11$0$0 ($13,198,166)($52,792,665)
ESTIMATED
NET EFFECT
ON LOCAL
POLITICAL
SUBDVISIONS$0$0 ($13,198,166)($52,792,665)
FISCAL IMPACT – Small Business
Certain small businesses may pay less in state tax as a result of this proposal.
Small businesses that buy and/or sell feminine hygiene products or diapers would have to
collect/pay a different sales tax rate on these items
FISCAL DESCRIPTION L.R. No. 5974H.06C
Bill No. HCS for SS for SCS for SB Nos. 3 & 5
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September 28, 2022
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This proposal modifies provisions relating to taxation.
This act contains emergency clauses.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Revenue
Office of Administration - Budget and Planning
Julie MorffRoss StropeDirectorAssistant DirectorSeptember 28, 2022