The World Is Coming to an End Tax

Last week I wrote Governor Nixon is Right – A Tax by Any Other Name is Still a Tax Increase about House Bill (HB) 1329 and the tax increase it represents. Now some are implying that the world for some may come to an end if the legislature doesn’t override the Governor’s veto. That may or may not be the case but if it is, blame rests on the shoulders of the local government officials impacted by the tax — not on the bill that was vetoed!

Many legislators are trying to build their case for raising taxes by telling people that it’s not a tax increase because people were already paying it until the courts ruled it illegal. Lots of political double-speak going on here.

The tax has not been collected since earlier this year. So by definition it would now be a new tax. A tax that should be voted on at the local level, not railroaded by the legislature in an apparent unconstitutional move.

Now the hue and cry of sky is falling is being ramped up. To hear the supporters of this tax increase talk, businesses are going to shutter their doors, local governments will default on their debt, road safety will be jeopardized and local government services will cease. I don’t have a problem with believing that local governments over-spend just like state and federal governments and so need the money. What I have a problem with is that everyone of the affected governments has passed at least two opportunities to fix the problem and most are missing a third! None of these opportunities include having the legislature increase taxes without a vote of the people!

The Missouri Supreme Court first issued their opinion that the “sales tax” collections that had been going on for some 60 years was illegal on January 31, of this year. It’s interesting to note the position that doing something wrong for 60 years makes it somehow okay, but I digress. The January 31st date was technically too late to place the issue of a local use tax on the April ballot. I say technically because the local government entity could have to go to the courts to get it placed on the April ballot but no guarantees so let’s give them a pass.

However, they have no such pass on the June, August or even the upcoming November elections. They can claim they believed the state was going to “fix” the problem for them but they have no excuse. Osage County certainly didn’t rely on that excuse when it placed it’s local use tax on the August 7th ballot. It passed.

Local governments have no excuse for not placing a local use tax on the ballot. The Quill v North Dakota case back in the 1990′s should have been enough warning to any county and city about establishing a local use tax. Now that the courts have rightfully found that a retail sales tax cannot be charged to purchases not made in the state – and in certain cases within the state – these entities are scrambling to have someone else clean up after them.

HB1329 may have good intentions but it’s the wrong solution to a real problem. The Governor’s veto message hits all the high points – or should we say, low points — of the bill without political rhetoric. The solution is not a state level solution — especially when it involves breaking the state constitution to “solve” it.  All that will lead to is further uncertainty and loss of revenue for these local governments.

The legislature SHOULD NOT override the Governor’s veto of HB1329. 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. They have already missed several and have NO right to complain about the loss of revenue!

More information to come.