Senators looks at modifying munitions law

Monday, February 25, 2008 | 8:16 p.m. CST; updated 8:40 p.m. CDT, Tuesday, July 15, 2008

JEFFERSON CITY — Missouri senators hope to catch up with Kansas and Illinois in the aerospace industry by extending the tax-exempt status when selling arms to foreign governments.

Legislation discussed Monday in a Senate committee hearing would close a potential loophole that could allow munitions companies to be taxed when selling arms to foreign governments for training use within the United States.

The bill’s sponsor, Sen. Tom Dempsey, R-St. Charles County, said many smaller nations such as Singapore often conduct their military training procedures over international waters or in the United States. He said the bill would make sure that companies that often do business with foreign governments, such as Boeing Co., are not subject to taxation.

Dempsey said the legislation wouldn’t change any existing tax law in the state. Instead, it would clarify part of the U.S. Constitution, which already exempts taxes for munitions companies selling to foreign governments.

The bill has the support of Boeing Co. and pro-business lobbying groups such as Associated Industries of Missouri.

“This bill will allow Missouri to be on equal footing with other states such as Kansas and Illinois that have major aerospace and defense industries that already exempt such transactions,” said Dennis Moeller, tax project manager for Boeing Co. in St. Louis.

The bill was presented to the Senate Ways and Means Committee on Monday afternoon. Dempsey told the committee he hopes the bill will be placed on the consent calendar, a collection of bills that are generally undisputed and quickly passed by legislators.

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