JEFFERSON CITY, Mo. – Gov. Nixon vetoed a bill that would correct tax increases caused by a court decision changing the interpretation of sales tax law.
Senate Bill 20 designated that commercial laundries could not be taxed both on supplies needed to operate the business and the final product. Commercial laundries held this tax exemption for years, until a court decided the rule did not apply to the businesses, said bill sponsor Sen. Will Kraus.
“When taxes are levied by court rulings, it raises costs for businesses and those costs are passed onto consumers,” Kraus said. “These tax law reinterpretations hurt job creators and taxpayers, as well as Missouri’s economy.”
The statute in question exempts items used in the manufacturing, processing, compounding, mining, or producing of any product. Previously, large laundries were taxed on items they rented out in the final price of the product, but the chemicals used to clean the rental items were exempt. However, the recent court ruling disqualified the cleaning supplies, giving DOR the ability to tax supplies needed to maintain rental products and the end products. In his veto letter, the governor stated that he did not believe commercial laundries qualified for the tax exemption on materials.
“I believe that commercial laundries fall under the original interpretation of this law,” Kraus said. “Unfortunately, the courts did not agree, and the businesses are subject to double taxation. I am disappointed that the governor vetoed this bill and is allowing that practice to continue.”
