Missouri-made vehicles could get state sales tax exemption

~ Some dealers say the measure passed by the House might be illegal.

Missouri's car buyers may soon look for more than a nice set of wheels. They'll want a made-in-Missouri vehicle so they won't have to pay the state sales tax.

Buy a new Dodge Caravan made in Missouri and pay no state sales tax, state lawmakers say. Sorry, the tax would still apply if you chose a rival minivan or any other vehicle manufactured out of state.

You also could get a Ford F-150 pickup truck tax free or a GMC Savannah van, or a Harley-Davidson Sportster motorcycle, just as long as you buy one made in Missouri.

The state House on Thursday overwhelmingly passed legislation that would waive the state's 4.225 percent sales tax on all models of vehicles built in Missouri -- a twist on the economic incentive plans offered by other major auto-producing states.

The measure now goes to the Senate.

Supporters hope the waiver would convince Missourians to buy more vehicles made in the state, which could spur more automakers to manufacture more models, build new factories in Missouri and preserve the high-paying, high-benefit factory jobs.

'Begs' for challenge

But several local car dealers objected to the legislation, contending it would make it harder for dealers to sell cars, trucks and vans manufactured out of state.

Some dealers and even an official with the Missouri Automobile Dealers Association in Jefferson City say the measure might be illegal.

"It does beg probably for a constitutional challenge," said Sam Barbee, executive vice president of the auto dealers association.

Barbee supports the measure in an effort to keep auto manufacturing jobs in the state. But he said critics might argue that the legislation discriminates against dealerships that sell vehicles that are assembled out of state.

Kody Newkirk, general manager of Wieser Honda in Cape Girardeau, suggested the measure might violate the federal Fair Trade Act.

"That is unbelievable," he said of the legislation. Lawmakers, he said, need to reconsider the cost to the state in terms of hurting car sales at many dealerships.

"If these guys really start putting a pencil to this thing, it could cost them a whole lot more than they could save," he said.

Chrysler, Ford, General Motors and Harley-Davidson make vehicles in six plants in Missouri, but none makes cars -- only pickup trucks, sport utility vehicles, vans and motorcycles. In fact, only a handful of the vehicles that the proposal would exempt from the state sales tax get more than 25 miles per gallon.

And while consumers would save about $1,350 on their F-150s listed at about $32,000, a spokeswoman for Ford Motor Co. said she didn't know how strong an incentive the sales tax waiver would be for Ford to build more of its vehicles in Missouri.

"We view this more as something that would be beneficial to consumers," said Ford spokeswoman Anne Marie Gattari.

Randy Ott, sales manager for Brennecke Chevrolet in Jackson, said the bill would do little for his dealership. That's because General Motors manufactures cargo vans in Missouri, which make up only a fraction of the vehicles sold at Chevrolet dealerships, he said.

Ott said it would be confusing for consumers and car dealers, with even two vehicles of the same make priced differently on the same lot depending on where they were made.

The bill is sponsored by a Democrat but has bipartisan support, including the two top ranking members in the House -- Speaker Rod Jetton and Speaker Pro Tem Carl Bearden. It passed the House 152-1.

Rep. Michael Spreng, whose district could lose more than 1,300 jobs due to Ford's plans to shutter and close the St. Louis Assembly Plant in Hazelwood, said it would be foolish not to try something.

"We need to do anything we can to try to save some of these jobs," said Spreng, D-Florissant.

According to the Department of Economic Development, the Hazelwood plant directly and indirectly contributed more than 6,700 jobs and $23.2 million in tax revenue to the state. Overall, Missouri's six vehicle plants employ 16,000 workers, create an additional 54,000 jobs, pay $236 million in state taxes and account for almost 3 percent of the state economy.

"This waiver would help car manufacturers and auto workers," Spreng said. "Job retention and job creation is what this is all about."

Rep. Ed Robb, a former economics professor at the University of Missouri-Columbia, was the only House member to vote against the tax break. He said it would take more than knocking a thousand dollars off the sticker price to keep the manufacturing jobs.

The waiver is expected to cost at least $3.6 million in its first year, and Robb said little of that would be recouped because the additional vehicle purchases prompted by the tax waiver wouldn't leave a big enough footprint on the manufacturer's bottom line.

"This is not going to cause any motor vehicle manufacturer to stay in Missouri," he said. "It just doesn't have a possibility of making a difference."

The auto dealers' Barbee said it's important to try to promote Missouri-built vehicles, but he is concerned that the bill would create an uneven playing field for car dealers.

In addition, many of the vehicles assembled in Missouri are shipped to dealerships out of state, Barbee said. But the measure might lead some manufacturers to sell more of their Missouri-made vehicles in the state rather than elsewhere, he said.

Robb said the proposal is geared to help Missouri's current automakers, which are struggling to stay afloat, and not to attract companies that are expanding, such as Toyota or Honda.

"Personally, I think both Ford and General Motors will declare bankruptcy," he said. "So why are we investing in them?"

Southeast Missourian staff writer Mark Bliss contributed to this report.