Local leaders say a Missouri House Bill will remove a “competitive advantage” for neighboring states and limit cuts to local funding.
The bill would reverse a Missouri Supreme Court ruling that states local sales taxes can’t be collected on vehicle sales.
The bill could financially impact local governments.
That’s why the motive of Gov. Jay Nixon’s intent to veto the bill are called into question by Franklin County Presiding Commissioner John Griesheimer.
House Bill 1329 would reverse a January Supreme Court ruling that 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.
Griesheimer said the bill would fix a tax revenue hole created by the high court.
“I can’t understand why the governor would give neighboring states a competitive advantage,” he said. “I cannot understand why he would do that — if going to err, he should err on the side of Missouri. A few people would find fault in that, but most would praise it.”
Griesheimer, who is a former car salesman, said car dealers in neighboring states already are luring Missouri buyers by touting cheaper taxes when purchasing vehicles across state lines.
“Dealers already are using this as a sales tool. I don’t understand it,” said Griesheimer. “He is smart enough to know we can’t continue to let this happen.
“There has to be some reason for this,” he added.
A resident of Lees Summit, Mo., (located southeast of Kansas City) contacted The Missourian after reading about the issue on emissourian.com. He said dealers in Kansas also are targeting Missouri consumers.
According to State Rep. Dave Hinson, 98th District, Nixon said he would veto House Bill 1329, calling it “unconstitutional” because the bill raises taxes without voter approval, which is a component of the Hancock Amendment to the state’s Constitution.
The House Bill passed with 122-21 support Wednesday before the session ended Friday. The legislators are discussing a possible override of the veto, according to Hinson
He fears, however, that many of the state’s Democrats may not break party ties and override the Democratic governor’s veto.
“People who live in border cities are definitely affected,” Hinson said. “I would think they (House Democrats) would put policy in front of party, but you never know.”
Three of the 57 Democratic House members and all Republican representatives are needed to override the veto.
“The worst part is waiting until September to do a veto override,” Hinson said. “That is the stinker — counties and cities have to wait until September.”
Griesheimer added that the Missouri Association of Counties has sent emails asking county leaders to flood Gov. Nixon’s office with phone calls.
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.
For example, 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.
According to Griesheimer voters already approved the sales tax decades ago and could be asked to do so again if the governor’s veto holds.
“These taxes are not just enacted,” he said. “It went up to a vote of the people and this may require a second vote.
“There is a commerce clause problem — now Missouri is at an economic disadvantage with neighboring states,” Griesheimer added. “This is an easy fix for him (Nixon). The job issue alone is a serious problem. The only way it is a constitutional issue is if somebody challenges it.”
There are some municipalities and counties that still receive local taxes for vehicles purchased out of state, including the city of Washington.
Those are counties and cities that impose a 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.