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Nixon vetoes Mo. vehicle sales tax legislation

Friday, July 13, 2012

JEFFERSON CITY, Mo. -- Rejecting lobbying from local officials and Missouri vehicle dealers, Gov. Jay Nixon vetoed legislation Thursday that would have allowed communities to resume levying local taxes on vehicle purchases.

Nixon, a Democrat, said the legislation amounted to a new tax without a public vote, and in his veto message to lawmakers called the bill "an affront to every Missourian who has not yet had the opportunity to vote on whether to impose" the tax.

Missourians long have paid state and local taxes for vehicle purchases when they register their cars, trucks and other vehicles. But the state Supreme Court ruled earlier this year that local sales taxes cannot be levied when the purchase was made in another state. The ruling also applied when an individual sells a vehicle to another Missouri resident.

The high court's decision still allows a local "use tax," which applies to items used locally but bought without paying a home-state sales tax. However, most Missouri cities and counties have not enacted a use tax. Forty counties of Missouri's 114 now have a use tax, and the governor's office estimated it is levied in more than 90 municipalities.

No use taxes are in place in Cape Girardeau County. County officials have estimated the loss of revenue from sales tax on out-of-state purchases will cost the county about $250,000 a year if the tax isn't put in place. County officials began sounding the alarm about the tax in March after hearing about the court decision.

The ruling, county officials said, put local businesses at a disadvantage.

Cape Girardeau voted down a county 0.5 percent use tax proposal 3,348-3,127 in 1996. At that time, Presiding Commissioner Gerald Jones said he felt the issue may not have been well-understood at the polls, as the tax would not have affected the "general populace."

The bill approved by the Republican-led legislature sought to reverse the Supreme Court's ruling. Missourians who bought vehicles out of state would be charged both a state tax and a local tax equivalent to that of the Missouri city and county in which they live.

Rep. Ryan Silvey, who sponsored the legislation, bluntly denied the governor's assertions and said the bill sought to reinstate an existing tax. He said Republican leaders might consider overriding Nixon's veto when the legislature convenes in September. Silvey said Missouri faces an economic disadvantage when residents have a tax incentive to buy vehicles at dealerships in neighboring Kansas and Illinois and that communities could face budget pressures.

"The revenue that's he's just signed away with that veto is the revenue that goes to pay cops, goes to pay firefighters, goes to pay all your local municipal employees," said Silvey, R-Kansas City.

'I'm not on that side'

Speaking to reporters at the state Capitol on Thursday, Nixon said a strong case could be made for local voters to enact a use tax, but that "trying to come to the legislature and saying let's pass a bill in the middle of the night and raise taxes without a vote of the people -- I'm not on that side of that question."

Organizations representing Missouri counties and cities expressed disappointment with the governor's decision to veto the sales tax legislation. Proponents said voters approved the local sales taxes and that people have been paying them on vehicle sales for a long time.

In the weeks after lawmakers approved the bill, mayors, administrators, county commissioners, RV dealers and others sent the governor's office more than 100 emails, letters and online messages urging him to sign the bill. About two dozen city councils approved resolutions endorsing the legislation.

The Missouri Association of Counties said numerous counties now could consider asking voters to approve a use tax. Dunklin County in the Bootheel passed a new use tax in June, and the association said voters in central Missouri's Osage and Randolph counties would consider next month whether to enact a use tax.

Supporters had warned that rejecting the legislation could cost dealerships customers who travel elsewhere for a tax break. Dan Mehan, the president and CEO of the Missouri Chamber of Commerce and Industry, said Thursday the organization would work to address the tax issue next year, but was "disappointed that our businesses will lose these sales to dealers in other states in the meantime."

Local officials said counties and municipalities could be forced to forgo millions of dollars in tax revenue.

"It's not a complete disaster, but it's an annoying trend. It's going to be a problem," said Richard Sheets, the deputy director for the Missouri Municipal League.

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Thanks Mr Nixon for showing real leadership on this law.

-- Posted by Dexterite1 on Fri, Jul 13, 2012, at 5:39 AM

Is Missouri some kind of bizzaro state in which it's the Republicans who seek to increase taxes. Looking at the Cape sales tax, the highest in the state, one could easily believe that Obama will win the city.

Those car lot options in East Cape soared on Gov. Nixon's action.

-- Posted by semowasp on Fri, Jul 13, 2012, at 7:34 AM

Yea Mr Nixon....Mo says no now taxes without a public vote and you enforce our wishes! Way to go!

And semowasp, Obama won't win anything down here. Folks here have voted for the tax and spend GOP forever.

-- Posted by Mudflopper on Fri, Jul 13, 2012, at 8:23 AM

There ought to be one, initial "Sales tax" on vehicle ownership, when the vehicle is purchased new, except for a trade-in credit, which should be repaid. It's ridiculous to have to pay sales tax every single time a vehicle is sold. A person does not go to yard sales and pay sales tax. Yes we pay on stores that run a business for re-sale; but not every single time a person buys something used! We should find a more reasonable way to fund road maintenance, police traffic support, etc. A good fuel tax fund that gets used "properly" in all areas of the State of MO AND promotes good renewable fuel resource development for our future, would be a good way to start this.

-- Posted by renewableenergy on Fri, Jul 13, 2012, at 8:37 AM

Thank you Governor Nixon! You are listening to the people!

-- Posted by Spinning on Fri, Jul 13, 2012, at 11:55 AM

"A good fuel tax fund that gets used "properly" in all areas of the State of MO AND promotes good renewable fuel resource development for our future, would be a good way to start this."

A fuel tax becomes even more ridiculous than a vehicle sales taxes when we start having significant numbers of vehicles running on electric, natural gas, and other alternative energy sources.

If you want a good & consistent way to tax road users for the maintenance of the roads in a fair manner the best route is taxing tires. The tax can vary based on the tire type & lifetime to properly account for those who utilize the roads more frequently or with heavier vehicles. Driving a new car, old car, gas car or electric car would all be equalized, and those that cause the most damage to our roadways will generally pay their fair share as tire wear corresponds much better to road wear than the value of the vehicle or the value of its fuel does.

-- Posted by Nil on Fri, Jul 13, 2012, at 2:51 PM

What a great decision made by Nixon. The sales tax on vehicles is out of control. I am also tired of every politician using police and firefighters as pawns.

-- Posted by foreman on Sat, Jul 14, 2012, at 11:51 AM

Nil - suggest our fine thinkers in the MO legislature have already figured out the end-around of alternatively-fueled vehicles - http://dor.mo.gov/motorv/decals.php.

At $75 per year for a passenger vehicle, and given the current gasoline tax of $0.357 per gallon ($0.184 federal and $0.173 state) - comes out to a little over 200 gallons worth of gasoline-gallon equivalent tax collected. This may be offset to some degree by federal tax credits for alternative fuels. The methodology is perhaps not perfect or fair, but taxation has certainly not been overlooked on these fuels.

The tire tax - hmmm, not sure this is a good path forward. Assume a set of 50,000 mile tires on a vehicle getting 20 miles per gallon. Approximately 2,500 gallons of fuel would be consumed through the life of the tires. At the $0.357 per gallon currently collected - about $892 of fuel tax. To collect an equivalent amount of fuel tax on four tires - would raise the price per tire $223.

Chatter is already going around on taxing for the miles driven - not gaining a lot of traction, but the idea is out there.

Suggest drawbacks to taxing tires or miles would be the huge lump sums due - figure people would be pressured to run tires until they were transparent, or to gain a heightened motivation to figure out a way to disconnect the odometer. Bleed a little each time versus hemorrhage a lot a few times versus figure a way to cheat the system...

Suggest the sales tax on vehicles is a bit harsh. IMO, either pay property tax annually or pay sales tax once, but not both. The difference in sales tax between living in Cape city versus Cape county on a $20,000 vehicle amounts to $550, with $1595 due in the city and $1045 due in the county. Imagine what would happen if one had to pay the full sales tax on a house, and then continue to pick up the annual property taxes to boot.

The property tax on a $20,000 vehicle also varies depending on site of residence - but assuming a flat $5 per $100 valuation across the board, and the 33-1/3% personal property tax assessment rate - $20,000 x $5/$100 x 0.333 = $333 on the first go-round, falling as the vehicle depreciates through subsequent years, to what I presume is a minimum of $5 - what I've paid on the good ol' Ford truck the past several years...

Couldn't help but notice the similarity between this and the push for Internet taxes - local parties clamoring to equalize the playing field through raising taxes on others rather than by lowering taxes on themselves. No matter the outcome, it does present a certain entertainment value. :-)

-- Posted by fxpwt on Sat, Jul 14, 2012, at 1:23 PM

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