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Nixon questions tax cut bill’s unintended prescription sales tax hike


Department of Revenue responds to legislators’ comments about language coming from the Department

By Ashley Jost

ST. LOUIS, Mo. — Gov. Jay Nixon expressed concerns in a statement today regarding House Bill 253, the legislature’s coveted tax cut bill, saying that after careful review he’s found the bill could result in a $200 million tax increase on prescription drug users.

Gov. Jay Nixon
Gov. Jay Nixon

The statement said the tax increase comes from a portion of HB 253 which eliminates the current sales tax exemption on prescription drugs, which Nixon said “puts a strain” on Missouri families that might be suffering from chronic or life-threatening conditions.

“That is why it is so troubling that House Bill 253 would repeal Missouri’s long-standing sales tax exemption on prescription drugs,” Nixon said. “If enacted, this provision would impose a $200 million sales tax hike on Missourians and increase the cost of the medications they need. This is a tax increase that Missourians cannot afford and don’t deserve.”

Shortly after the release was sent, Sen. Will Kraus, R-Lee’s Summit, who spearheaded the tax cut efforts in the Senate, issued a statement saying the language the governor was questioning came to him directly from Nixon’s Department of Revenue.

“That exact language was recommended to me by the governor’s own Department of Revenue, and, throughout the process, officials at DOR assured me and others that the language was correct,” Kraus said about the Streamlined Sales Compact portion of the bill.

Michelle Gleba, Director of Communications for the Department of Revenue, told The Missouri Times that “the language provided to Legislative Research by the Missouri Department of Revenue protected the sales tax exemption for prescription drugs.”

Kraus told The Missouri Times that it is his understanding the language in question that came from the DOR was the same used in House Bill 500.

Sen. Will Kraus, R-Lee's Summit
Sen. Will Kraus, R-Lee’s Summit

Kraus said in his statement that the removal of “over the counter” in the second reference of the streamlined sales language would “leave the prescription drug exemption intact.” He then urged Nixon to sign the bill, saying that the streamline portion doesn’t take effect until January 1, 2015, giving the legislature through next session to take action on changing the language that Nixon addressed.

Nixon released a second statement in response to Kraus.

“While the Senate handler may not consider a $200 million tax increase on prescription drugs a cause for immediate concern, I do,” Nixon said, adding that this is only “one of many red flags” that’s been found in reviewing HB 253.

House Speaker Tim Jones, R-Eureka, told reporters in Columbia Thursday that if the language in question is in Streamlined Sales Tax portion of the bill, “that portion may never go into affect until the Fed passes National Streamlined Sales Tax Act, which is sponsored by our own Senator, Roy Blunt.” He also added that he too was told that language came from Nixon’s administration.

Jones said that Rep. TJ Berry, the bill’s sponsor, and the House’s tax attorneys are taking a look at the language, and Jones will make any information they find available as soon as possible.

To contact Ashley Jost, email, or via Twitter at @ajost.