We don’t agree with Gov. Jay Nixon’s veto of legislation that would have imposed local sales taxes on vehicles bought from out-of-state dealers or through sales between private parties. It’s the second time in two years that the governor has turned his back on the General Assembly’s legislation to correct this unfairness to Missouri vehicle dealers and to counties and cities that are shortchanged in sales tax funds.
The Legislature will try again in this session to overcome the governor’s objections by crafting another bill. Time is short.
The governor said the bill was flawed and could result in inequitable taxation or a greater loss of revenues to local governments. The governor said the bill fails to protect Missourians’ right to vote on all the taxes the bill would impose.
Senate Bill 182 was a response to a 2012 Missouri Supreme Court decision which invalidated local taxes on out-of-state and person-to-person vehicle sales. The decision created an incentive for people to buy vehicles from out-of-state dealers, rather than buying from in-state dealers. It is a way to escape sales taxes.
Gov. Nixon said the bill was unacceptable to him because it would deny voters the ability to be heard on the entire scope of the tax.
The bill undoubtedly was not perfect. No bill ever is. Sen. Mike Kehoe said he was disappointed in the governor’s veto and surprised because lawmakers worked with the governor’s staff to craft a bill that would be acceptable to Nixon. Kehoe said he will work on a third bill that he hopes will be acceptable.
The Associated Press reported that there were 112,000 vehicles bought from out-of-state dealers and 650,000 vehicles sold in non-retail transactions in 2012. Some local governments haven’t waited for a state solution to recapture lost revenue. More than 50 of Missouri’s 114 counties and more than 100 of the state’s 950 municipalities now have local use taxes allowing them to collect sales taxes on all vehicle sales.
Franklin County does not have a local use tax. Washington does have one, but most municipalities in the county do not.