Missouri lawmakers have passed legislation attempting to undo the effects of two state Supreme Court sales tax rulings that business groups say would be costly for companies.

The House approved the bill 150-1 on Wednesday. It already had cleared the Senate, so it now goes to the governor.

At issue is when sales taxes should be charged. Missouri does not levy sales taxes on items that are purchased so that they can be resold. But the Supreme Court ruled that tax exemption does not apply if sales taxes will not eventually be collected down the line, such as if the supplier is selling them to a government entity that doesn’t have to pay taxes or if the items will be given away.

Rep. Mike Sutherland, R-Warrenton, called the legislation an important tax policy issue. House Republicans said the bill could help spur economic development.

“This legislation will protect tourism, the business community and significantly aid in job retention for our citizens,” said House Speaker Ron Richard, R-Joplin.

Critics of the court rulings warned the decisions would create problems for businesses, harm tourism and drive up the cost of supplies bought by the state, schools and other government bodies.

Both the Missouri Chamber of Commerce and Industry and the Associated Industries of Missouri praised lawmakers for trying to mitigate the Supreme Court decisions.

“The judicial tax increase last summer would have established one of the largest tax increases on Missouri business by taxing goods sold to any exempt organization,” said Ray McCarty, the president of the Associated Industries of Missouri.

The Supreme Court cases focused on the private jail company ICC Management and Branson theater operator Music City Centre Management. The high court ruled in June that the jail company needs to pay sales taxes on supplies that it bought for inmates — and essentially resold to local governments. In August, the court determined a theater company was required to pay taxes on tickets sold to timeshare companies and given away to people. It did not have to pay sales taxes for tickets sold to other companies and then resold to customers.

Missouri business groups said the court decisions would have been particularly problematic for companies that do business with government entities that aren’t required to pay sales taxes. But they contend it also could have affected businesses that sell goods to churches, charities and other tax-exempt groups.

“This is a big issue for us this year, and something we have to get fixed this year,” said Tracy King, the director of taxation and fiscal affairs for the Missouri Chamber of Commerce and Industry. “It’s going to be a significant impact. The cost is going to increase and business is going to leave the state.”

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