Politics
3:18 pm
Thu May 30, 2013

Emails Show Nixon Administration Involvement In Accidental Medicine Tax

Updated 5:02 p.m. May 31

Newly released emails show that Gov. Jay Nixon's administration and legislative bill drafters each had a role in crafting an apparently inadvertent tax increase on prescription medications.

The prescription tax hike is included in a bill passed by the Legislature that cuts the state's income tax. Nixon has indicated he may veto the bill.

Emails provided Friday to The Associated Press show an official in Nixon's Department of Revenue provided suggested wording in January to a legislative staffer that would have kept in place an existing sales tax exemption on prescription drugs.

But there were other problems with the draft. So a legislative staffer sent a revised version back to the Revenue Department that included the prescription tax error. The Revenue Department official then signed off on that version.

Original story:

Governor Jay Nixon says a bill that was meant to be an income tax cut would actually be a sales tax increase for many Missourians.

The Democratic Governor has repeatedly criticized the bill, but has yet to say if he’ll veto it. On Thursday, he issued a press release saying the bill would actually cause a $200 million sales tax hike on prescription drugs.

"That is why it is so troubling that House Bill 253 would repeal Missouri’s long-standing sales tax exemption on prescription drugs," Nixon wrote. "This is a tax increase that Missourians cannot afford and don’t deserve.”

Republican Senator Will Kraus from Lee’s Summit handled the bill, and says the tax hike was inadvertent.

“It was not the intent of the legislature to change that," Kraus said. "Streamlining is a pretty big bill – about 300 pages with a bracket here and a bracket there. This was an inadvertent change that the Department of Revenue could have corrected throughout the process but didn’t.”

The portion of the bill in question.
Credit Screenshot of HB 253.

 The sales tax increase is the result of an inadvertent bracket. As the Associated Press's David Lieb writes:

When drafting legislation, changes to Missouri laws are made by putting brackets around words and phrases to be deleted. In this particular case, the imposition of the pharmaceutical tax resulted from a misplaced bracket in the bill. The bracket was similarly misplaced in several other bills containing the streamlined sales tax wording, none of which ultimately passed.

He says Nixon’s qualms are just the governor searching for an excuse to veto, and that there is an easy solution.

“The governor signs this bill, we go come back into session next year, we will correct this mistake and make sure we put back this exemption for prescription drugs,” Kraus said.

If Nixon does veto the bill, there will most likely be a contentious override vote in September. Kraus says he’s confident that the prescription exemption will not affect veto votes.

Follow Chris McDaniel on Twitter@csmcdaniel