Opponents of the idea for a so-called "Fair Tax" in Missouri are sounding the alarm. They say that while legislation aimed at eliminating the state income tax in favor of the "Fair Tax" – an expanded sales tax on goods and services – failed to clear the General Assembly this year, the idea will likely return in the future.
Among those expressing concerns was Amy Blouin of the Missouri Budget Project, who doesn’t like the idea that items not currently subject to the state sales tax would be taxed under the proposal.
"Products and services that are currently not taxed would be eligible for this new tax at a significantly increased rate," said Blouin in a conference call with reporters. "Things like nursing home services, child care services, doctor’s visits, food, prescription drugs, even funerals."
Proponents say the state sales tax would increase from the current 4.225 percent to 5.11 percent, but the opponents say a rate of at least nine percent would be needed to bring about revenue neutrality. The concern is also raised that Missourians living along state borders will make purchases in neighboring states to avoid the higher tax.
"At least two of our urban centers are bordering other states that would have significantly lower tax rates," said Blouin. "And people are likely to go across the border to meet their needs."
Blouin concedes she has no facts and figures to back up that claim.