JEFFERSON CITY, Mo. (AP) -- The Missouri House voted Monday to repeal over five years a state tax on businesses' assets in an effort to boost economic development.
The House legislation would reduce Missouri's franchise tax rate and repeal the levy for the 2016 tax year. The state has levied a franchise tax on corporations' assets such as inventory and buildings since 1917. However, Missouri gradually has reduced the tax rate and exempted smaller businesses. In 2009, lawmakers exempted firms with less than $10 million in assets.
Supporters of the measure, including business groups, say eliminating the franchise tax will make Missouri more appealing to new businesses and help existing businesses grow.
Republican Rep. Jerry Nolte, who is sponsoring the House legislation, said Missouri is one of the few states that levy a state franchise tax and a corporate income tax. He described it as a "double-whammy."
"How many taxes do we pile on to these businesses and expect them to come into this state or remain in this state?" said Nolte, of Gladstone.
Opponents of the measure wonder how the state will offset the revenue lost by eliminating the tax. Some warned that the loss of revenue could weaken the education system, which could hamper efforts to attract new businesses through good schools and educated workers.
"We are playing Santa Claus with money we don't have," said Rep. Stephen Webber, D-Columbia.
The legislation was approved by voice vote on Monday, and needs another round of approval before it can move to the state Senate. Two weeks ago, the Senate approved its own similar version of the franchise tax legislation by a 29-4 vote.
Franchise tax bills are HB76 and SB19
(Copyright 2011 by The Associated Press. All Rights Reserved.)