Missouri voters will decide Tuesday if the state and its law makers will be prohibited from placing new sales taxes on services.
For the past seven sessions, the state legislature has considered, but not passed, taxes on a wide range of services.
Backers of Amendment 4, which would forbid such levies, say at risk services include health care, real estate, haircuts, auto repairs, accounting and many others. Scott Charton of Missourians for Fair Taxation says the state Revenue Department recently acted, without supervision, to impose sales taxes on deliveries. “Right now, Missourians are paying more for things like pizza deliveries, flower deliveries” said Charton. “The Missouri Propane Association has told its members that certain propane deliveries are now going to be taxable with winter coming on. That is an overreach by a bureaucracy.”
Charton claims Amendment 4 would prevent further levies on services. “It is a preemptive strike. But, ya know, when your house is on fire, you don’t wait until then to get a fire extinguisher. You take proactive steps.”
This year, the Missouri legislature passed a measure to do away with taxes on dance and yoga classes after they were imposed by the Revenue department several years ago. After lawmakers overrode Governor Nixon’s veto of it, the measure became law.
Even though some taxes on services appear to have already been imposed, opponents of Amendment 4 say there are no plans for any more in the near future. Traci Gleason with the Missouri Budget Project, which opposes the amendment, says any new levy on services would have to go before voters. She points to the Hancock Amendment, that lawmakers passed in 1980, as a guarantee for the procedure.
Gleason says prohibiting taxes on services outright would restrict the state’s ability to adjust to a changing economy over the next decade. “We used to purchase all of our music in a music store” said Gleason. “We got a hard copy. Now, people rarely purchase records or CD’s anymore because we are getting downloads. We don’t know what other types of changes are coming. We need to make sure that we are flexible.”
One of the arguments the Budget Project makes is that Amendment 4 would make it” impossible for a sales tax to be added to online transactions or music downloads, which have replaced in-store purchases that could formerly be taxed”.
Gleason says it’s important not to rush the service sales tax into law. “Rather than tie our hands now, I think we should allow our state to continue to be flexible. And if people are feeling like ‘Oh, this is too much of a bite’, look at our whole tax system rather than reacting to a service tax proposal that doesn’t actually exist.”
Along with the Missouri Budget Project, Amendment 4 is opposed by the Missouri Municipal League which represents over 600 cities and towns across the state.
The amendment’s supporters are numerous, including businesses that provide services thought to be susceptible to a service sales tax. They include The Missouri Automobile Dealers Association, NFIB (National Federation of Independent Business), Missouri Society of Certified Public Accountants, Missouri Cattleman’s Association, Missouri Soybean Association and the Missouri Association of Realtors.