JEFFERSON CITY - A Republican-controlled Senate committee is resurrecting discussion over a proposal that has been deemed unconstitutional, suffered a gubernatorial veto and was called a "tax increase" less than a year ago.
On Wednesday, the Senate Committee on Transportation and Infrastructure heard the bill, which allows the collection of taxes on cars bought outside Missouri or through private sales. Committee chair and former car dealer Sen. Mike Kehoe, R-Jefferson City, sponsored the bill, which imposes local sales taxes on the sale of all cars, trailers and boats regardless of where it was purchased. It also prohibits counties and municipalities from imposing a use tax on them. The local tax rate would be determined by the customer's residence.
For example, if you were to buy a car in Illinois, you would have to pay a local tax dependent on where you live in Missouri, but if you were to buy a car in Jefferson City when you live in St. Louis County, you would pay the local tax rate in St. Louis County, not the rate of Jefferson City where you purchased the car.
Proponents said the bill would "fix" a Missouri Supreme Court decision from May of 2012, which ruled the Missouri Department of Revenue could not collect local taxes on vehicles purchased outside the state of Missouri. The court ruled the tax was used to privilege doing business in Missouri, making a tax on out-of-state vehicles unconstitutional.
A similar bill passed last year, was vetoed by Nixon because he objected that it included a retroactive part that would force those who purchased cars out of state before the passage of the bill to pay those local taxes. He said it would not be fair to bill some 122,000 drivers for a tax that was created after they bought their vehicle. Nixon painted the retroactive section as a tax increase.
Kehoe said this year's bill does not include the retroactive tax component that many were up in arms about last year. Cars purchased out-of-state before the tax would be instated would not be forced to pay it.
Numerous Missouri car dealers, especially those near the Illinois border, voiced support for the bill, including Dave Sinclair, the owner of four car dealerships in the St. Louis area. He said three of the four dealerships are within five to seven miles of the Illinois border and he sees Illinois car dealers heavily advertising the tax differential between buying a car in Missouri and buying a car in Illinois. He said the differential can range from several hundred to several thousand dollars.
"I don't know how many of you are in the retail trade but several hundred dollars will definitely change a buying decision," Sinclair said.
Sinclair said he is worried about what the current condition of out-of-state car purchases will do for employment. In his four dealerships he said he employees around 400 people both selling and fixing cars.
"If that trend continues, they'll (Illinois dealers) need more people to sell cars and we'll need fewer," Sinclair said. "So long term it's not good for our employment situation."
Richard Sheets, deputy director of the Missouri Municipal League, said the way things are right now is hurting revenues of municipalities. If passed, even cars bought outside of the state will benefit and create revenue for the purchaser's home city. These revenues go toward paying for the certain aspects of a city's needs, such as the salaries of law enforcement officers.
"Our phone rings off the hook from city officials wanting to know when and how this is going to be corrected," Sheets said.
No one spoke in opposition at the hearing. In the past, Nixon said cities and counties should put this issue to a vote. He said cities and counties voting on a "use tax" would be a proper way to collect money on cars purchased out of state.
The committee is scheduled to vote on the bill Thursday.