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Missouri Retroactive Tax Looming

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Photo Credit: Thinkstock

Photo Credit: Thinkstock

JEFFERSON CITY, Mo. (AP) — Gov. Jay Nixon sent state lawmakers a letter Monday warning that more than 120,000 Missouri residents could face a retroactive tax if the Legislature overrides his veto of a bill allowing communities to resume levying local taxes on vehicle purchases.

State lawmakers passed the tax legislation this year after the Missouri Supreme Court ruled local sales taxes cannot be levied when vehicle purchases are made in another state. The court ruling also applied to instances when an individual sells a vehicle to another Missouri resident.

Missourians long paid state and local taxes for vehicle purchases when they register their cars, trucks and other vehicles, and the bill passed by the Republican-led Legislature sought to reverse the court’s ruling. The bill would have applied retroactively to vehicles purchased after the high court’s ruling.

Nixon said figures from the Department of Revenue show no local sales tax was paid on 122,702 vehicles bought after the March 21 effective date of the court ruling. He said those people believe they have satisfied their tax obligations.

“It is unfair and punitive to retroactively tax at least 122,702 Missourians, particularly without a vote of the people,” Nixon said in his letter Monday.

Local officials, vehicle dealers and others had lobbied Nixon this summer to sign the tax legislation. Supporters of the bill warned that many communities were likely to lose revenue without the measure, while vehicle dealerships feared customers would travel elsewhere to buy cars and trucks to claim a tax break.

Some Republican supporters of the sales tax legislation have said the measure reinstates an existing local tax and therefore does not amount to a tax increase.

Nixon announced his veto in July. Instead of the sales tax legislation, Nixon said that a strong case could be made for local voters to approve a “use tax,” which is levied on items used locally but bought without paying a home-state sales tax. The state Supreme Court’s tax ruling still allows use taxes on vehicle sales.

Conservative activist Carl Bearden, a former House Republican leader, said lawmakers should not override Nixon’s veto.

“They should take a stand for their constituents and let local governments do their jobs – putting a local use tax on the ballot at the next opportunity,” Bearden said in a recent online column.

So far, 41 of Missouri’s 114 counties have a use tax, and the governor’s office has estimated that more than 90 municipalities have the tax.

Earlier this month, Osage County approved a use tax, while Howard County rejected one. The Missouri Association of Counties said at least two more counties plan to seek voter approval for a use tax in November.

The sales tax warning letter from Nixon comes two weeks before Missouri lawmakers return to the state Capitol on Sept. 12 to consider veto overrides. Among the bills that Republican leaders were considering are the vehicle sales taxes bill and a measure that expands religious and moral exemptions for insurance policies covering birth control.

A successful veto override requires a two-thirds majority — 23 votes in the state Senate and 109 votes in the state House. Republicans now control more than two-thirds of the Senate but would need to pick up several House Democratic votes to succeed. The most recent veto to be overridden was Nixon’s rejection of new congressional districts in 2011.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

 

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