Gov. Jay Nixon signed a bill last week reinstating the tax revenue lost by cities and counties when the Missouri Supreme Court ruled they had to stop collecting sales taxes on vehicle, boats and other large items purchased outside Missouri, but that won't change Carthage's plans to put a use tax before voters, possibly in November.
Gov. Jay Nixon signed a bill last week reinstating the tax revenue lost by cities and counties when the Missouri Supreme Court ruled they had to stop collecting sales taxes on vehicle, boats and other large items purchased outside Missouri, but that won't change Carthage's plans to put a use tax before voters, possibly in November. According to Nixon's office, Senate Bill 23 “addresses the Missouri Supreme Court's decision in Street v. Director of Revenue by replacing local use taxes with a local sales tax.” “Gov. Nixon had vetoed two previous legislative responses to the Street decision because the bills did not sufficiently protect Missourians' right to vote on tax policy,” the governor's office said in a written release. “Senate Bill 23 addresses these concerns by requiring a public vote in local jurisdictions without a local use tax.” Carthage City Administrator Tom Short said the bill appears to help Carthage by restarting the collection of those sales taxes, but the city will still need to ask voters to approve a use tax to keep collecting the revenue after November 2016. “The bill is one of those mega-bills that's about 194 pages long,” Short said. “I haven't read it fully, but it appears we can start collecting the sales tax as long as it isn't challenged in court again. We'll definitely talk about it at the August Budget Committee meeting, but we'll still have to talk about the use tax as well.” At the July Budget Committee meeting, Short presented City Council members with a plan to ask voters in Carthage to approve a use tax that would be equal to the city's sales tax rate of 2 and 7/16th of a cent for every dollar. He said the city could be losing as much as $63,000 a year in tax revenue because of the Street Decision, which said the state did not have the authority to collect sales taxes for entities that did not already have use taxes on purchases of cars, boats and other items that exceed $2,000 in value. A use tax is imposed on the storage, use or consumption of “tangible personal property” in the state and applies to purchases made out of state and brought back for use in Missouri. The state already has a use tax in place, so someone who buys a car in Kansas or any other state, then brings it to Missouri to be licensed and titled, pays the state's tax rate of 4.225 cents on the dollar, but does not pay Carthage's share of the sales tax, 2.438 cents, or Jasper County's share, 0.975 cents. At last week's regular Carthage City Council Meeting, Short estimated someone buying a $20,000 car outside Missouri would save $600-800 in sales tax after the Supreme Court's decision. On Friday, Short said the passage of Senate Bill 23 would help, but he still didn't know when the state would start collecting the taxes for the city and county. Short said in order to get a use tax on the November ballot, when other cities in Jasper County are also planning to ask voters for a use tax, a council bill would have to be recommended by the Budget Committee at its Aug. 12 meeting and approved by the full City Council at its Aug. 13 and Aug. 27 meetings. Short emphasized that the use tax would be the same rate as the city's sales tax and would not be imposed on any purchase that is also subject to a local sales tax at the location where it is purchased. He said there could never be a “double tax” on something. A simple majority vote by Carthage voters would be needed to approve the use tax. Flanigan praises passage Missouri Representative Tom Flanigan (R-Carthage) applauded the Governor for signing Senate Bill 23 because it contained the Rebuild Damaged Infrastructure Fund for Joplin. “I applaud the Governor for his continued efforts to help the people of Joplin,” Flanigan said. “And I would like to thank my colleagues in both the House and Senate for their support and efforts on behalf of this legislation.” Flanigan went on to say that the fund will be used to repair, rebuild, and reconstruct infrastructure that has been damaged by natural disasters, specifically the continued work on rebuilding the city of Joplin and surrounding area. “Missourians take care of their neighbors, and this fund is a demonstration to that commitment to help others in times of need. And I look forward to continue working with the Governor on such issues,” Flanigan also said.