Sales tax veto

Gov. Jay Nixon recently vetoed legislation that would have allowed communities to resume collecting sales taxes on vehicle purchases.

Nixon took an intriguing point of view.

He said he saw the legislation, which overturned a Supreme Court decision, as "an affront to every Missourian who has not yet had the opportunity to vote on whether to impose" the tax.

Missourians are accustomed to paying state and local taxes for vehicle purchases when they register their vehicles. The court ruled earlier this year that these local taxes cannot be levied on out-of-state purchases. If a vehicle is purchased out of state, Missouri does not collect state sales tax revenue, but local entities have been able to collect, a prerequisite to obtaining a license.

Cape Girardeau County officials have estimated that this decision could cost the county more than $200,000 in annual revenue. That is significant, but not the most important effect of the veto.

With his veto, Nixon has put Missouri car dealers at a major disadvantage against competitors in neighboring states.

Dealers face a real threat that customers will cross state lines to avoid local sales taxes, which can be several hundred dollars. 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. According to The Associated Press, 40 counties of Missouri's 114 now have a use tax, and the governor's office estimated it is levied in more than 90 municipalities.

Some legislators have suggested an attempt to override Nixon's veto. Meanwhile, many local communities will be making decisions about whether to enact a use tax to level the playing field for car dealers.

Nixon made a narrow decision to protect taxpayers' rights, a position that does have some merit. But by doing so, he just gave Missourians huge incentives to take their business elsewhere.