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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