JEFFERSON CITY, Missouri -- Lawmakers have given final approval to a measure designed to allow Missouri communities to continue levying taxes on car sales.
Missouri residents have long paid sales taxes on vehicle purchases in their home communities during registration. But the state Supreme Court ruled earlier this year that Missouri communities can’t levy sales taxes on purchases made in other states. Communities can charge a local use tax—if voters have enacted one. Currently, 39 counties and St. Louis city have a use tax.
House members voted 122-21 early Thursday to approve legislation to reinstate the local sales tax. Under the measure, Missouri residents who buy cars out of state will be charged state sales tax and the sales tax of the Missouri town or city in which they live. The Senate approved the measure Wednesday, so the bill now goes to Gov. Jay Nixon, who criticized it several hours after it gained final legislative approval.
Nixon, a Democrat, said the legislation would “bypass a vote of the people and improperly impose a tax increase.” He said his administration has been working with local government officials and auto dealers to find a solution.
Sen. Jason Crowell, R-Cape Girardeau, said local governments could lose millions of dollars if the tax is not reinstated. He also said car dealerships in cities near the state’s borders could lose business, potentially hurting local economies.
“Not only is this a shot to our municipalities, but it has long term ramifications for the employment base,” he said. “I think it’s reasonable to assume if this issue isn’t addressed, those businesses will no longer flourish.”
Republican Sen. Mike Kehoe, a former car salesman from Jefferson City, said Missouri dealerships are already struggling to compete against those in other states, which have an advantage in being able to offer a tax break on purchases.
Kehoe gave members of the media copies of an advertisement run in local St. Louis newspapers by Weber Chevrolet in Columbia, Ill. The ad said customers could save as much as $810 on the purchase of a $30,000 car by buying it on the other side of the river, because they would only pay Missouri state sales tax—not Missouri local taxes.
Weber Chevrolet has stores in both Missouri and Illinois. President and CEO George Weber III told The Associated Press on Thursday that he had actually talked to St. Louis-area lawmakers about reinstating the local sales tax in Missouri, even while he promotes the tax difference for his Illinois stores.
“I think a level playing field is the best option,” he said. “At the same time, we’re very customer service-oriented, and we want to get as many deals as we can from competitors.”
Weber said his Illinois stores have seen a few additional sales since the ruling was issued about two months ago, but he said the number of the sales could increase if Nixon does not sign the bill passed Thursday.
“If this stays in place for years, it will become part of the culture (in Missouri) to realize, ‘Hey, we should buy our cars and boats out of state’,” he said.