Bill would curtail tax credits; end break for two newspapers

Thursday, April 15, 2004

JEFFERSON CITY, Mo. -- The House gave initial approval Wednesday to a bill capping the size of some tax credit programs, closing others to new applicants and excluding Missouri's two largest newspapers from a break on sales taxes.

Part of the bill reflects Gov. Bob Holden's "Jobs Now" initiative, which proposes to repeal some credits against income taxes and put the savings into public works projects.

Rep. Tom Dempsey, R-St. Charles, said his bill would "help Missouri bring new jobs to communities all over the state." The measure received first-round approval on a voice vote and needs another vote to go to the Senate.

The House amended the bill Wednesday to disqualify the St. Louis Post-Dispatch and The Kansas City Star from an existing law that lets newspapers buy ink, paper and other supplies without paying state sales tax.

Rep. Richard Byrd said his amendment was intended to snare more revenue from wealthy corporations. He said the Post-Dispatch, which is owned by Pulitzer Inc., and The Star, owned by Knight Ridder Inc., avoided $7 million in state sales tax over the past decade because of the current law.

"I want to hurt the big businesses. We want to promote the small businesses," said Byrd, R-Kirkwood, adding, "This only affects profitability. This doesn't affect viability."

House Minority Floor Leader Rick Johnson accused Byrd of trying to punish the Post-Dispatch for its Easter Sunday editorial ridiculing the House of Representatives as the "House of Hypocrites."

That editorial was surrounded by thumbnail photos of 66 House Republicans -- Byrd not among them -- that it said participate in the state's health insurance plan but voted to eliminate or reduce Medicaid coverage for thousands of poor Missourians.

"What we have here is a retaliatory tax increase ... for revenge," said Johnson, D-High Ridge. "The other side of the aisle had some unfavorable press that was written about them over the weekend."

Byrd responded that he had started working last Wednesday on his amendment, which applied to newspapers with annual operating revenues exceeding $250 million and average Missouri daily circulation exceeding 200,000.

Citing the corporations' federal filings, Byrd said Knight Ridder reported annual operating revenue last year of $2.3 billion, while Pulitzer Inc. reported $422 million.

Tax credits have become a legislative target this year as lawmakers try to determine how effectively they accomplish their purposes, typically economic development.

The House bill repeals the Rebuilding Communities tax credit, which according to the Post-Dispatch, has allegedly been used to defraud the state of millions of dollars. It also expands the definition of an enterprise zone -- in which new businesses can receive local and state tax breaks -- to make more areas eligible.

Six tax credit programs would be closed to new applicants, including two Holden proposed repealing as part of the "Jobs Now" proposal.

The bill also includes a specific tax break for the planned construction of a new downtown Kansas City headquarters for H&R Block Inc.

Tax credit bill is HB1409.

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