USE-TAX BATTLE

Last week, 41 cities and counties, including the city of Cape Girardeau and Cape Girardeau County, filed suit against the Missouri Department of Revenue. Their argument is that they shouldn't be required to repay use-tax revenue or the 12 percent interest the state is also demanding.

In March, the Missouri Supreme Court declared the local portion of the state's use tax unconstitutional. Shortly thereafter, revenue department officials notified local governments that the department would begin withholding disbursements of sales-tax revenue until use-tax funds were recouped.

The use tax is a replacement for sales tax made chiefly on out-of-state purchases. It is paid, overwhelmingly, by businesses located out of Missouri. To their credit, unlike many localities, the city and county governments here hadn't spent the money. Rather, they had segregated it in a special fund pending the outcome of the litigation.

What local officials especially object to is the revenue department's demand for an unusually high rate of interest: 12 percent. It is hard to justify such a high rate. There is no mention of refunds, much less payment of interest, in the high court decision that struck down the use tax. It will be interesting to see how this lawsuit plays out in the courts.