Franklin County Presiding Commissioner John Griesheimer is asking municipalities to join the county in pursuing a “local option use tax” to capture sales tax on large items purchased out of state.
Griesheimer spoke to the Union Personnel, Finance and Public Works Committee Monday asking officials to ask voters in April 2013 to approve the tax.
A January Missouri Supreme Court ruling states cities and counties can’t collect sales taxes on vehicle, marine and trailer sales if the purchase was made out of state.
The ruling went into effect in March.That gives local dealers a “competitive disadvantage,” Griesheimer said.It is estimated that the Supreme Court ruling will cost Franklin County over $1 million in sales tax revenue a year.State sales taxes, at the rate of 4.225 percent, still are collected on all vehicles registered to Missouri residents.
If a vehicle is purchased in Illinois the buyer is not subject to the municipal sales tax, only state sales tax. If a vehicle is purchased in Missouri, for the same price, the buyer still is required to pay the local sales taxes.“It is totally unfair,” Griesheimer said.
“As this continues to progress it is going to cost jobs — there is no doubt about it.”A local use tax would be a mechanism to collect the taxes for items purchased out of state, Griesheimer said.County officials have not voted to place a use tax on the ballot.
The city of Washington is the only entity in the county that still receives local taxes for vehicles purchased out of state through the voter-approved local option use tax.The city of Washington currently has a 2 percent option use tax.
That means Washington could still collect 2 percent in taxes on vehicles purchased by city residents, even if the vehicle came from out of state or from a private individual.
Griesheimer said there was a bill to fix the tax revenue hole created by the high court approved last legislative session, but it was vetoed by Gov. Jay Nixon because it included a retroactive clause.
He added that even if a similar bill is approved, it could get challenged again in the Supreme Court.
“The only way to fix this is to push for a use tax,” Griesheimer said.That is why he will push for a local use tax even if legislators fast track a bill that would allow Missouri entities to collect the vehicle taxes.
He further explained that he will meet with Gerald city officials Thursday night, and others in the coming weeks.
“If we do this as a number of entities, we have a better chance to pass it,” Griesheimer said.
City Administrator Russell Rost said he was informed earlier this year that the city would lose about $42,000 annually in tax revenue as a result of the Supreme Court ruling.
“That was before people knew about it,” he said.