Sales tax on food exemption-sales tax increase.

05LSO-0101.L1

                                                         

FISCAL NOTE

 

This bill contains an appropriation of $4,900,000 from the GENERAL FUND.

 

 

FY 2006

FY 2007

FY 2008

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Increase:

 

 

 

GENERAL FUND

25,110,000

25,690,000

26,380,000

LOCAL SOURCES FUND

11,120,000

11,380,000

11,680,000

 

Source of revenue increase: Increase in the state sales and use tax rate by 0.3 percent to a total of 4.3 percent.

 

Assumptions:

 

The above estimates are based on October 2004 CREG projections, and assume an increase in the sales and use tax rate to 4.3 percent, net of the proposed exemption on food. If the unappropriated general fund balance at the end of the budget period minus the expected shortfall in the school foundation program exceeds $35 million, the tax rate will decrease from 4.3 percent back to 4.0 percent.

 

 

FY 2006

FY 2007

FY 2008

NON-ADMINISTRATIVE IMPACT

 

 

 

Anticipated Revenue Decrease:

 

 

 

GENERAL FUND

(17,340,000)

(17,730,000)

(18,210,000)

LOCAL SOURCES FUND

(11,120,000)

(16,350,000)

(16,790,000)

 

Source of revenue decrease: Exemption from sales and use tax of food for domestic home consumption.

 

Assumptions:

 

Local governments are held harmless in FY06 by the appropriation in the bill. The revenue decrease for FY06 is offset by the appropriation to equal the revenue increase from the change in tax rate, thus bringing the net impact on local governments to zero.

 

Estimates based on sales and use taxes of food retailers from FY04 Distribution by Minor Business Class Report, reduced by 25 percent to estimate non-food sales.

 

Prepared by:   Dean Temte, LSO      Phone:   777-7881

(Information provided by Dan Noble, Dept. of Revenue; phone 777-5220)

 

This bill has administrative impact that appears to increase (or decrease) duties or responsibilities of one or more state agencies and may impact agency spending or staffing requirements. As introduced, the bill does not modify any state agency budget or current personnel authorizations.

The following state agencies will be asked to provide their estimate of the administrative fiscal impact prior to the first committee meeting held to consider the bill:

Department of Revenue

Department of Audit