The passage of a bill that intends to reinstate the local sales tax on out-of-state vehicle purchases has been received with cautious optimism by Franklin County’s presiding commissioner.
Just because the bill has passed the state Legislature does not mean it is safe from the courts finding it unconstitutional, Presiding County Commissioner John Griesheimer said.
And Gov. Jay Nixon must still sign the bill.
“We think there’s a good shot that he will,” Griesheimer told The Missourian Friday.
The bill is an attempt to reinstate the local sales tax that was found unconstitutional by the Missouri Supreme Court last year.
Griesheimer said the county commission would likely have to pass a commission order affirming the reinstatement of the sales tax locally.
He said he would support putting the tax back on the books locally. When the tax is not in place, local businesses are put at a competitive disadvantage because consumers will go out of state to buy products to avoid paying sales taxes, he said.
Griesheimer noted that people need to understand that it’s not an additional tax. He said it’s only paid when products are bought out of state and sales taxes are not paid there.
Under the bill, the county would be able to collect sales taxes on out-of-state vehicle purchases for up to two years. But then the tax would have to be put up to a vote of Franklin County residents as to whether it would remain in place. The vote would have to take place between 2014-2016, he said.
Once it came time to have the vote to keep the tax, Griesheimer said he would rather just put a use tax on the ballot, saying he thinks it would work better for Franklin County.
The use tax can apply to more types of products, such as building supplies, while the reinstated sales tax would only be for motor vehicles, trailers, boats and outboard motors.
Moreover, it would be good to have a use tax in place in case federal law is passed allowing for the county to collect taxes on Internet sales, he said.
“We are much better off going for a use tax,” Griesheimer said.
He said he does not know the chances of a use tax passing here, adding that local Chambers of Commerce will have to get behind it. He supports putting it on the ballot next year.
Some counties in the state, including Warren County, passed use taxes in the Tuesday election. The city of Washington already has a use tax in place so it can collect taxes on out-of-state vehicle purchases even without the sales tax reinstated.
Gasconade County had a use tax on the Tuesday ballot, but it failed, Griesheimer noted.
A use tax would allow the county to tax materials and equipment that were used in the county even if they were bought elsewhere.
For instance, if steel to construct a building is purchased in another state, Franklin County could still impose a use tax if the materials were used here.
Loss of Revenue
Griesheimer has said that the loss of the sales tax on out-of-state vehicle purchases has hurt the county’s revenue by 3 to 5 percent, roughly.
Having the tax back, “will definitely help,” Griesheimer added.
State Sen. Mike Kehoe, R-Jefferson City, sponsored the bill to get the tax reinstated.
Griesheimer said he and other county officials from around the state have been warned of the possibility of the tax being overturned by the courts again.
Therefore, Griesheimer said if the county starts collecting revenue off of the tax again it may be best to hold the funds in an account in case there is a ruling that says the sales tax is unconstitutional and has to be refunded.
County Auditor Tammy Vemmer said it is hard to say how much of an impact the loss of the sales tax has had on revenue. There is not enough history without the sales tax to compare to years when it was in place, she said.
Sales taxes were down about $25,000 in January compared to January the year before, but that could be for reasons other than the vehicle sales taxes, Vemmer said. But she said having the sales tax reinstated surely can’t hurt the county.