Cape Girardeau County could lose $250,000 to new sales tax rules

Tuesday, May 15, 2012

Cape Girardeau County stands to lose an estimated $250,000 in sales tax revenue from motor vehicle purchases after a March ruling made by the Missouri Supreme Court. Legislation that would allow the collection of the taxes locally must pass by the end of the session Friday or wait until next year.

The court ruling prohibits cities and counties without local use taxes to collect taxes on vehicle, boat, trailer or motor purchases made outside the state. Before March, no matter where a person made such purchases, sales taxes were paid at registration according to the local sales tax rate associated with the buyer's home address.

The Missouri Association of Counties distributed loss estimates to county officials provided by the Department of Revenue to educate them on how the new law may affect county income. For Cape Girardeau County, which does not have a use tax, an estimated 21 percent of vehicle sales taxes, or $249,032 based on 2011 figures, will be lost.

At the state level, legislators have introduced bills in the House and Senate to prevent damage to local governments and businesses. Senate Bill 591, sponsored by Sen. Mike Parson, R-Bolivar, would close all vehicle sales at the time of registration instead of at the dealer so that local sales taxes could be collected based on buyer residence address. House Bill 2100, sponsored by Rep. Caleb Jones, R-California, would create a similar rule that would consider the sale to be made at registration.

A narrower provision is House Bill 1402, proposed by Sen. Bill Stouffer, R-Napton, and handled in the House by Rep. Eric Burlison, R-Springfield, which simply states that counties and municipalities can submit a local use tax solely on vehicle, boat, trailer or motor purchases measure to voters, equal to the local sales tax. Slightly different versions of the bill passed both the House and Senate and lawmakers were trying to agree on a final version Monday afternoon, according to Burlison's office.

However, local officials already have the authority to introduce use tax measures.

Cape Girardeau County narrowly voted down a 0.5 percent use tax proposal in 1996 by 3,348 votes to 3,127. Of the 114 counties and one independent city in Missouri, 39 counties and St. Louis city have local use taxes. To get a vote on the August ballot, county officials would have to act by May 29.

MAC said in information prepared for county officials that use taxes are challenging to pass because voters may misunderstand them as an additional tax on everyday purchases. Instead, use taxes are designed to equalize losses from out-of-state purchases, including purchases made online.

The attraction of possibly saving money by traveling across state lines is appealing to consumers, MAC said, but the losses to counties will eventually affect individual taxpayers when there is less money to execute county functions, such as repairing roads and bridges or maintaining law enforcement.

"The biggest losers are your county retailers and merchants, who are placed at a decisive competitive disadvantage," a MAC statement said.

Mike Skelton, general sales manager at Cape Girardeau Honda, said that regional differences in tax laws do create an obstacle for local dealers. Profit margins are often narrow, he said, making it difficult to match customers' demands when they ask for price breaks to recoup discounts they might get by buying out-of-state. He said he appreciates buyers that are committed to purchasing locally, which allow dealers to provide quality selection and service.

"There are people that will buy local no matter what, and God bless them," Skelton said.

Parson, Jones, Stouffer and Gov. Jay Nixon were not available for comment Monday on legislative actions. Calls to county commissioners late Monday afternoon were not returned.


Pertinent address:

1 Barton Square, Jackson, MO

Map of pertinent addresses

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