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Missouri Gov. Vetoes Tax Break for Dry Cleaners

Senate bill aimed at large laundry, drycleaning businesses

JEFFERSON CITY, Mo. — For the second straight year, Missouri Gov. Jay Nixon has vetoed a proposed tax break for large laundry and drycleaning businesses in his state, saying it represented an unfair expansion of existing tax breaks for manufacturers.

Senate Bill No. 20, passed by the Republican-led Legislature, would have made certain laundries and dry cleaners exempt from paying state and local sales and use tax on their purchases of machinery, utilities, chemicals and other “ingredients” used to treat, clean and sanitize textiles.

The exemptions would have been limited to laundries and dry cleaners that process at least 500 pounds per hour and 60,000 pounds per week. According to Nixon, a Democrat, that totals approximately 48 facilities owned by 29 different companies, and would have cost the state $4 million in lost state and local revenues.

The bill’s sponsor, Sen. Will Kraus, R-Lee’s Summit, argues that commercial laundries should not be taxed both on supplies needed to operate the business and on the final product. Commercial laundries held this tax exemption for years until a court decided the rule did not apply to the businesses, he says.

“Although some of the tax exemptions available to manufacturers are limited solely to state taxes, these new exemptions for laundries would apply to local taxes as well,” Nixon wrote in his veto letter. “With this provision, the General Assembly would be privileging washing dirty clothes over manufacturing new products, giving commercial dry cleaners and laundries a better deal than Missouri manufacturers without any clearly articulated economic justification for doing so and without requiring the creation of even a single new job.”

“I believe that commercial laundries fall under the original interpretation of this law,” Kraus says. “Unfortunately, the courts did not agree, and the businesses are subject to double taxation. I am disappointed that the governor vetoed this bill and is allowing that practice to continue.”

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