Sunday, September 9, 2012

A Moment with Mike for September 12th, 2012



      With the annual “veto session” coming up this week there is much speculation about bills that have been passed by the legislature but vetoed by the Governor.  One of those bills that will certainly warrant a lengthy discussion is one that would reinstate local vehicle taxes on out-of-state purchases.  It is a bill we passed with bipartisan support during the regular session but also one that has caused a great deal of debate and controversy.
      The root of the issue is a Missouri Supreme Court ruling handed down earlier this year that denied municipalities the ability to collect local sales taxes on out-of-state vehicle purchases.  The court ruling made an important distinction between sales taxes that are collected on in-state-purchases and what are known as “use taxes” that can be collected on products used in Missouri but purchased in other states.  The court also applied the ruling to person-to-person sales that occur when individuals choose to sell a vehicle on their own.  In effect, the court said that cities and counties can collect vehicle sales taxes only on purchases made at Missouri dealerships, and that their only option to collect taxes on other purchases is through a use tax.
      Because the majority of municipalities in our state have no existing use taxes in place, the ruling effectively cut off a major revenue source for cities and counties in all parts of Missouri.  The change had the additional impact of making out-of-state vehicle purchases more desirable because of their tax-free nature, which put in-state auto dealers in a competitive disadvantage with their competitors across the border.
      In an attempt to help solve the problem, the legislature passed a bill that would allow local governments to once again collect sales taxes on all vehicle purchases.  With the change, auto dealers in Missouri would once again be on equal footing with their out-of-state competitors.  More importantly, cities and counties would once again be able to collect tax revenue that provides funding for so many vital services that they have provided for years.
      When Governor Nixon chose to veto the bill, he claimed the legislature’s fix circumvented the will of the voters and would prefer that each municipality give the people the opportunity to vote on whether to put a use tax in place.  He also claimed that if the bill went into law it would allow cities and counties to retroactively collect taxes on all purchases made in the months since the Supreme Court’s decision.  It is important to note that there is some dispute about whether the tax should be applied retroactively and the original sponsor of the bill has vowed to take steps to ensure it is not.
      With all of these factors in mind we must give this issue careful consideration.  On one hand we have a large number of cities and counties that saw the elimination of a revenue source they had collected and relied on for years.  We also see our auto dealers losing business to those across the state lines.  On the other hand, we have the many Missouri citizens who have enjoyed the reduced tax burden on their vehicle purchases. 
      Personally, I am one that is very reluctant to vote for any kind of tax increase, however, this may be more of an adjustment back to status quo.  I do not want to see local businesses fail and I do not want to see local communities stifled because of reduced revenue sources.  This is one of many issues that will be considered in Jefferson City this week.
       If you have questions, you may reach me at my Capitol number 573-751-9465, at the local district number, 660-582-4014, by email at mike.thomson@house.mo.gov or by mail at Room 401B State Capitol Building, Jefferson City, MO 65101.

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