Missouri Gov. Mike Parson (R) has vetoed a bill that would have provided COVID-19 tax relief, including temporary sales and use tax relief for entertainment venues and property tax credits for residents in areas affected by restrictive orders.
In a July 9 veto letter, Parson acknowledged the General Assembly's effort to improve the state's tax laws but said he was vetoing S.B. 226 because of "severely problematic" language in the bill.
Specifically, Parson objected to a provision in the bill that would provide a tax credit starting January 1, 2021, to property owners who are residents of cities or counties that impose restrictive orders for more than 15 days a year.
Under that provision, restrictive orders would be considered ordinances or orders that prohibit or otherwise restrict the use of a taxpayer’s real property, though it would not include restrictions on property because of public health or safety violations.
Parson said he understands that the provision “was designed to narrowly target small, local businesses harmed by overly intrusive local health measures.” But the language of the bill is so broad that nearly anyone living in a city or county could claim the property tax credit — a “significant departure from the current tax structure in Missouri,” he said.
“I support tax relief for businesses that could not operate during the pandemic due to excessive restrictions. I also value Missouri's local industries and sympathize with the hardships they have endured over the past 16 months. However, this legislation carries significant unintended consequences that could greatly harm localities beyond its attempted protection of individuals and businesses impacted by COVID-19,” the governor said.
Parson also criticized a provision in the bill that would temporarily allow entertainment venues to deduct and keep 100 percent of state sales or use taxes on purchases of admission tickets to movies, films, and musical performances, and on the sale of concessions at the venue.
The provision would “subvert sales and use taxes from remittance to the state and instead empower private businesses to keep those taxes,” Parson said, adding that it “does not broadly serve Missouri's interests.”
“Entertainment venues were undoubtedly directly impacted by COVID-19, and their presence is vital to our state. However, they were not the only industry that suffered detrimental impacts. There are numerous other affected industries that were not provided this special tax treatment opportunity by the General Assembly,” Parson said.
Meanwhile, the governor said he supports the bill's sales tax exemption for some cancer treatment devices and hopes the legislature will pass it again during the next legislative session.
He also noted that he supports two other provisions in S.B. 226, both of which were included in other legislation signed into law June 30 as S.B. 153/S.B. 97. One provision expands an existing personal property tax break for owners of noncommercial aircraft that are at least 25 years old and flown for fewer than 50 hours each year, extending the hours-flown requirement to fewer than 200 hours per year. The other provision changed filing periods for sales tax remittance.
Not mentioned in Parson's veto letter is a provision of S.B. 226 that would have allowed medical marijuana businesses to deduct expenses that would otherwise be allowable as a federal income tax deduction if not for IRC section 280E, which prevents businesses from deducting expenses related to cannabis.
The bill's sponsor, Senate Ways and Means Committee chair Andrew Koenig (R), could not be reached for comment by press time.