Amid warnings of possible lost jobs and declining revenue for cities and counties, Missouri lawmakers are making another run at reinstating local sales tax on vehicle purchases after Gov. Jay Nixon vetoed an attempt last year.
The Associated Press reported that a Senate transportation committee heard testimony Wednesday (Feb. 6) on the Legislature’s most recent proposal that would allow cities and counties to impose a local sales tax on all sales of motor vehicles, trailers, boats and outboard motors but require voters to decide whether to continue levying it.
At issue is a January 2012 decision by the Missouri Supreme Court, which ruled Greene County could not charge a local sales tax on a man who bought a boat, motor and trailer from a dealer in Maryland. The court drew a distinction between sales taxes, which are collected from in-state retailers, and use taxes, which are levied on products used in Missouri but bought either from an out-of-state retailer or from an individual who does not run a business.
Although the state’s use tax could be imposed on the boat and its accessories, the high court ruled Greene County could not tax them because they were not covered by the local sales tax and county voters had not passed a local use tax.
Lawmakers sought to reverse the court ruling last year. Nixon vetoed the legislation and said counties and cities should have a voter-approved use tax if they want to tax vehicles bought from anywhere besides a Missouri dealership. The governor’s administration estimated last year’s measure would have imposed a retroactive tax on about 122,000 transactions.
Sen. Mike Kehoe, who is sponsoring the most recent measure, said Wednesday that figures from the Department of Revenue show cities and counties have lost a combined $43 million in revenue from in 2012 from April to December. Kehoe, a Republican, previously owned an auto dealership in Jefferson City.
Kehoe said the retroactive portion had been removed. Cities and counties that have not enacted a use tax would need to submit the revised sales tax to voters. It would appear between November 2014 and November 2016. The summary appearing on ballot could ask whether to “discontinue applying and collecting the local sales tax on non-retail sale of motor vehicles, trailers, boats and outboard motors.”
Currently, 43 of Missouri’s 114 counties and more than 90 of its roughly 950 municipalities have local use taxes. But results were mixed this past November among communities seeking to pass new use taxes.
A use tax was approved in Adair and Saline counties and in the cities of Huntsville, Kirksville, Moberly and New Cambria. But it was rejected in more places, including Buchanan, Macon, Mississippi, Randolph, Sullivan and Vernon counties. It also failed in the cities of Callao, Clark, La Plata, Macon, Mount Vernon, Pleasant Hill and St. Joseph.
Organizations representing Missouri vehicle, RV and boat dealers urged lawmakers to approve the local tax legislation.
Dan Sinclair, whose family owns vehicle dealerships in the St. Louis-area, said Illinois dealers have advertised the potential tax savings if Missouri consumers cross the Mississippi River and buy their vehicles out-of-state.
“Several hundred dollars will definitely change a buying decision,” Sinclair said.
The Senate committee is scheduled to vote on the legislation Thursday. Kehoe said he could propose some additional changes to help make the measure operate better.