Nixon Warns ‘Border War’ Tax Cut Bill Could Raise Taxes on Seniors May 31, 2013

(AP) — Already leaning toward a veto, Democratic Gov. Jay Nixon raised a new objection Thursday to an income-tax-cut bill passed by Missouri’s Republican-led Legislature – asserting it could result in a more than $200 million tax hike on prescription medications.
Nixon said his administration discovered the potential tax increase – an apparent technical mistake – as part of a routine but thorough review of legislation passed during the annual session that came to an official close Thursday.
“The out-of-pocket cost of prescription drugs, especially for those suffering from cancer, heart disease or other life-threatening conditions, already puts a strain on many Missouri families,” Nixon said in a written statement. “That is why it is so troubling that House Bill 253 would repeal Missouri’s long-standing sales tax exemption on prescription drugs.”
He added: “This is a tax increase that Missourians cannot afford and don’t deserve.”
Supporters of the legislation reacted to Nixon’s revelation with surprise and frustration.
Sen. Will Kraus, who was the main architect of the bill, said House sponsor Rep. T.J. Berry both said they never intended to repeal the existing tax exemption for prescription drugs and had no previous indication that the bill might do so. Kraus said the specific wording at issue actually was recommended by personnel in Nixon’s Department of Revenue.
“This is as much the governor’s slip up or mishap,” said Kraus, R-Lee’s Summit.
House Speaker Tim Jones said his staff had an email from the Revenue Department to legislative researchers suggesting the wording to which Nixon now objects.
“The governor really jumped the shark hard on this one,” said Jones, R-Eureka. “It’s pretty much his fault.”
But the Department of Revenue said Thursday that the wording it provided to legislative researchers would have protected the sales tax exemption.
Kraus, Jones and other bill backers suggested the governor should sign the bill into law and allow legislators to fix the error later – either in a September special session or during their 2014 regular session. They said there’s no need for immediate concern, because the changes to the prescription drug taxes wouldn’t take effect until 2015.
The legislation was a top priority this year for Republican lawmakers, who hold a supermajority in both the House and Senate.