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Sales Tax Cut Replaced

May 9, 1996
By: Dana Coleman
State Capital Bureau

JEFFERSON CITY - If you're young and you don't have kids, you wouldn't get a thing from a proposal before the Senate to cut taxes by $150 million per year.

That's because a Senate committee endorsed Thursday giving private pensioners and people with dependents an income tax cut.

The Senate Corrections and General Laws Committee approved the income tax cuts as a substitute for the House-passed two-cent-per-dollar cut in the sales tax on groceries.

The House bill's sponsor, House Ways and Means Committee Chairman Ken Jacob, D-Columbia, immediately labeled the Senate's approach as unacceptable.

Jacob complained that those who need tax relief the most - the poor - would not benefit from an income tax reduction:

"Everybody needs to buy food, but there are people in this state who are so poor that they don't have to pay any income tax," Jacob said.

But Senate President Pro Tem Jim Mathewson said people raising a family are the ones he thought the state should help with tax relief.

"It doesn't cost as much for them (single people without children) to live as it does when your raising little kids and that's what I'm about."

Joining Mathewson, the Senate's top Democrat, in proposing the income tax reductions with the Senate's Republican Leader Franc Flotron, R-St. Louis.

Senate committee members pointed out several red-flag issues during Wednesday's hearing.

Sen. Danny Staples, D-Eminence, cautioned that although the state can afford a tax-cut right now, the future holds economic uncertainties. And if the money is needed in the future, "Nobody will have the courage to raise the sales tax again," he said.

"Government goes in peaks and valleys. Right now, we're in a peak. But in a couple of three years, we're going to be in a valley," Staples said.

The Senate's proposal to increase the dependent deduction from $400 to $1,200 over a three year period would not go into effect until January, 1997.

Tax-payers wouldn't actually save any money until April, 1998, when they file their 1997 taxes, said Mark Ward, state budget director.

Jacob argues that Missourians would start reaping the benefits of his food-tax cut this July while, according to the state budget office, taxpayers would not get the benefits of an income tax reduction until 1998.

Since the beginning of the session, legislators have been arguing over the best way to pare down state tax collections that are exceeding the state's revenue limit by more than $100 million per year.

The governor originally proposed an across-the-board sales tax cut that would have reduced state revenues by $140 million per year.