JEFFERSON CITY - Missouri businesses are given a 2 percent discount for doing the same thing many Missourians do each year: pay their taxes on time.

State Auditor Susan Montee said the legislature should consider repealing the discount, which cost the state $93 million potential revenue in 2008.

"We are allowing $93 million to be kept by the vendors when now we're looking at vendors like Walmart who are virtually instantaneous (in filing taxes)," Montee said on Wednesday, after releasing her office's audit of the Department of Revenue.

The rebate was first instituted more than fifty years ago, Montee said, when taxes were tabulated by hand, and the law hasn't been changed since 1963.

But retailers argue that technology has not made the process easier.

"If anything, our costs are greater and its more complex than it was then," said David Overfelt, President of the Missouri Retailers Association.

Repealing the rebate would amount to a tax increase, Tracy King, director of tax policy and fiscal affairs for the Missouri Chamber of Commerce, said.

And repealing the rebate would disproportionately affect small businesses, King said, whose tax collection costs are greater than 2 percent.

"There are costs to being the tax collector of the state," she said.

Montee's report indicated that three of the states bordering Missouri -- Iowa, Kansas and Tennessee -- do not issue discounts to businesses for timely tax filing, while four of the five other states impose caps on the overall amount of tax funds that businesses can retain.

The issue is not new, Overfelt said, and has been debated numerous time.

But in difficult economic times, Montee said legislators should be more aware of the costs associated with the discount and with 131 tax exemptions covering a wide variety of purchases, including food sales.

The Revenue Department tracks the cost of the exemption for food -- a 3 percent reduction of sales tax -- but doesn't track most of the other exemptions.

"We're cutting all kinds of expenses," Montee said. "We need to be paying more attention to the revenue side."

The Revenue Department said the cost of updating their software and tracking these exemptions would be expensive, but Montee said the department has been making the same argument for more than ten years.

Montee said the State Auditor's IT department could review the software to determine the feasibility of an upgrade, but that no such review has occurred.

The report also indicated that Missouri businesses are annually issued millions of dollars in refunds for overpayment of sales and use taxes much of which rightfully belongs to consumers.

Previous legislation to address this refund has been unsuccessful, but Overfelt said retailers are not opposed to new legislation in this arena.

"We believe the money belongs back with the consumer," Overfelt said.