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F I S C A L I M P A C T R E P O R T





SPONSOR: HBIC DATE TYPED: 02/27/01 HB 202/HBICS
SHORT TITLE: Health Provider Gross Receipts Tax Deduction SB
ANALYST: Eaton


REVENUE



Estimated Revenue
Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY01 FY02
$ (6,000.0) $ (13,700.0) Recurring General Fund
$ (4,900.0) $ (11,000.0) Recurring Local Govt.



(Parenthesis ( ) Indicate Revenue Decreases)



SOURCES OF INFORMATION



Taxation and Revenue Department (TRD)



SUMMARY



Synopsis of Bill



The bill provides a five-year phased-in gross receipts tax deduction for receipts from services provided by almost all licensed health care practitioners. Licensed health practitioners include: physicians, osteopaths, chiropractic physicians, physician assistants, dentists, dental hygienists, doctors of oriental medicine, podiatrists, psychologists, RNs and LPNs, registered lay midwives, physical therapists, occupational therapists and respiratory care practitioners.



The deduction is scheduled as 20% from July 1, 2001 through June 30, 2002 and 20 percent each year thereafter until the receipts are fully deductible (100 percent). The deduction excludes certain Medicare receipts (already deductible).



FISCAL IMPLICATIONS



The Taxation and Revenue Department (TRD) estimate that the bill will reduce the general fund by $6 million in FY02. Local government revenues are estimated to be reduced by $4.9 million. A five year estimate of the impacts are described in the table on the following page.











ADMINISTRATIVE IMPLICATIONS



Minimal.



TECHNICAL ISSUES



The Taxation and Revenue Department (TRD) indicate that many practitioners have created pass-through entities (partnerships, professional corporations, etc.) to bill patients (or insurers or governments), receive payments and report and pay gross receipts tax. The formula in this bill allows a gross receipts deduction whether the practitioner or the pass-through entity is the taxpayer.



JBE/njw