JEFFERSON CITY — Proposed federal standards for carbon dioxide emissions are helping fuel some Missouri lawmakers' arguments for enacting a specific state sales tax break on equipment used in electricity transmission.
A sales tax exemption for poles, wires and transformers used by power companies is among several tax breaks passed this year by the Republican-led Missouri legislature. Democratic Gov. Jay Nixon criticized the series of cuts as a "cavalcade of special interest tax breaks" that he says could hamper state and local government finances.
Supporters say the proposal seeks to ensure equipment used in transmitting electricity is treated similarly to other manufacturing equipment that already is eligible for a sales tax exemption, avoid potential litigation and reduce costs for consumers.
House Majority Leader John Diehl said the emission standards announced this past week by the Environmental Protection Agency could require significant investments in Missouri. He said a state tax burden shouldn't be added to that.
The federal emissions standards set a goal for Missouri to reduce carbon dioxide emissions from power plants 21 percent by 2030. More than 79 percent of Missouri's electricity was generated by burning coal in 2012, and the EPA says carbon dioxide emissions were 1,963 pounds per megawatt hour. The agency's goal would reduce that to 1,544 pounds per megawatt hour in 2030.
Diehl, a Republican from Town and Country, said the sales tax break likely wouldn't offset all the costs, "but every little bit helps, and we want to try to provide as much relief to the ratepayers as we can."
Nixon's administration estimates the sales tax exemption would reduce all state government and local government revenues each by $30 million annually. The governor's administration says the package of tax breaks could cost state government $425 million annually and reduce revenues for local governments by $351 million per year. The figures do not count a general income tax rate reduction that will take effect gradually starting in 2017 if state revenues continue growing.
Nixon traveled to Kansas City and St. Louis last month to criticize the tax breaks, saying lawmakers "abandoned all fiscal restraint, broke their own budget blueprint and went on a special-interest spending spree on an unprecedented scale."
Rep. Eric Burlison, who supports the electricity transmission provision, said the sales tax exemption would help contain costs for power companies and protect customers from rate spikes.
"These new regulations have the potential to destroy jobs and cause massive rate hikes as our energy providers undertake extremely expensive steps to comply with these burdensome mandates," said Burlison, a Republican from Springfield.