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Minutes for HB2421 - Committee on Taxation
Short Title
Enacting a sales tax exemption for sales of currency, certain coins or bullion.
Minutes Content for Mon, Jan 29, 2018
Mr. Wells provided an overview on HB2421 noting it would add a sales tax exemption for all sales of gold, silver and numismatic coins; palladium, platinum, gold or silver bullion and currency. He stated since it is a carry-over bill from last session it will need some technical amendments if it should continue forward. Mr. Wells stood for questions from the Committee.
Patrick A. Heller, Liberty Coin Service, Lansing, Michigan testified as a proponent for HB2421 noting he led the effort in Michigan to enact a sales tax exemption for retail sales of precious metals bullion and rare coins in 1999 (Attachment 2). Twelve years later, Mr. Heller documented that the Michigan treasury sales tax. He later formulated a nationwide survey for the National Trade Show Industry Council for tangible assets which was done in 2016 to cover the 2015 actual data and again verified that states that have rare coin and precious metal sales tax exemption collect more sales tax than states that tax the merchandise (Attachment 3). Mr. Heller passed a 2018 1 troy ounce gold American Eagle coin as an example of one of the products which retails for $1,400 today. He noted if the coin was purchased in Kansas, a 9% combined sales tax would be added onto the $1,400. Mr. Heller stood for questions from the Committee.
In response to a question from Chairman Johnson, Mr. Heller stated Colorado, Nebraska, Missouri and Oklahoma have the tax exemption.
In response to a question from Representative Rahjes, Mr. Heller stated most states do not have registration or requirements to be a dealer for the sale of precious metals and coins. He noted there may be a requirement for some kind of licensure under a local ordinance but there is no federal requirement. There are investment brokers and coin dealers who may get involved with securities and because of that they are required to register with the Federal government. Mr. Heller stated when the tax exemption was enacted in Michigan, the number of coin dealers went up about two thirds and half of those were from existing businesses that added a coin and precious metal division to their existing operation which was considered a brand new business. Employment numbers went up due to the significant increase in business.
Kathleen Smith, Director Department of Revenue noted the fiscal note for HB2421 would decrease state revenues by $7,840. The State General Fund is estimated to decrease by $6,574 in both FY2018 and FY2019 and the State Highway Fund by $1,266 in both FY2018 and FY2019.
In response to a question from Representative Sawyer, Ms. Smith stated the Department of Revenue will take another look at the fiscal note for HB2421.
Kathleen McFadden, Executive Director, ICTA, Industry Council for Tangible Assets, Annapolis, Maryland testified as a proponent for HB2421 (Attachment 4). Ms.McFadden noted ICTA is headquartered in Annapolis, Maryland, and their mission is legislative and regulatory affairs for all 50 states and congress. She commented regarding the fiscal note to look at the static and dynamics of the fiscal note. The significant dynamic effect of the fiscal note would include revenue impacts such as coin shows, lodging, food, people coming into the state to purchase coins, precious metals and other products. Many coin shows can bring in hundreds of thousands of dollars even the smaller shows. Ms. McFadden's testimony included a State Sales Tax Map showing thirty-six states that have sales tax exemptions and Kansas is surrounded by states that have the sales tax exemption. Ms. McFadden stood for questions from the Committee.
Dean Schmidt, Dean Schmidt Rare Coins & Atchison Rare Coin Company testified in support of HB2421 (Attachment 5) stating lack of the exemption in Kansas has proven to be a major handicap for all customers in Kansas and for his business. He noted the collectors, investors and dealers in Kansas are not asking for an advantage but remedy a disadvantage to help them proposer into the future. Mr. Schmidt stood for questions from the Committee.
Robert Dunlap II, Equity Numismatics of Kansas testified in support of HB2421 (Attachment 6) stating former customers no longer purchase items but come to his store to tap his expertise and verify authenticity of items they have purchased elsewhere. The last large coin show would have been the American Numismatic Association show in 1987 and was held in Kansas City, Kansas. There was a significant number of people who drove a great distance to attend the show staying in hotels and eating in restaurants which generates revenue for Kansas. He stated the sales tax exemption would allow Kansas investors to buy locally which would generate revenue for the state in the form of income tax and sales tax on secondary sales. Mr. Dunlap stood for questions from the Committee.
Robin Tummons, President, Owner, House of Stuart, Ltd, Mission, Kansas testified in support of HB2421 (Attachment 7)
Josh McCleary, co-founder and COO, OWNx testified as a proponent for HB2421 noting the sales tax exemption for precious metals will be a net positive for the state and its citizens (Attachment 8). Mr. McCleary stood for questions from the Committee.
Rick Raines, Raines Rare Coins, LLC submitted written testimony as a proponent to HB2421 (Attachment 9).
John Ryan, Owner, American Rare Coin, Kansas City, Missouri submitted written testimony as a proponent to HB2421 (Attachment 10).
Eric Stafford, Vice President of Government Affairs, Kansas Chamber submitted written testimony as a proponent to HB2421 (Attachment 11).
Jp Cortez, Sound Money Defense League submitted written testimony as a proponent to HB2421 (Attachment 12).
After asking if there were any other conferees and seeing none, Chairperson Johnson closed the hearing on HB2421.
Meeting adjourned at 5:00 pm.
