Thousands of dollars in vehicle sales taxes will continue to be lost as a result of Gov. Nixon’s veto of Senate Bill 182 today. The legislation was designed to eliminate the competitive disadvantage for Missouri automobile dealers caused by a Supreme Court ruling last year. The Missouri Supreme Court ruled that local sales taxes cannot be levied when vehicle purchases are made by Missouri residents in another state. That decision provides Missouri residents an incentive to purchase vehicles across Missouri borders to avoid paying local sales taxes.
“The legislation would have restored Missouri’s automobile tax policy to what was originally intended and has been in practice for decades,” said Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry. “Thousands of Missourians are currently taking their money across Missouri state lines to purchase vehicles in order to avoid paying local sales tax. This number will continue to grow as more residents become aware of the opportunity to avoid taxes.”
The Missouri Senate unanimously passed SB 182. The Missouri House passed the measure on a 123-32 vote. King says that the governor’s veto today was the first time she was made aware of reservations to the legislation.
“Had we known of his reservations, we would have worked with lawmakers to address his concerns before the legislation was sent to Gov. Nixon,” said King. “It is a shame that these concerns were not shared with the sponsors during the legislative process. Fortunately, we have enough time left this session to pass an alternate bill that will address the issues outlined in his veto message.”
Specifically, the bill would prohibit counties and municipalities from imposing a local special use tax on motorized vehicle purchased out of state and brought back to the jurisdiction for licensing. Instead counties and cities would be allowed to charge the local sales tax rate on all motorized vehicles that are licensed in that jurisdiction regardless where the vehicle was purchased. The jurisdiction would have the option of eliminating the local tax through an election.
The governor’s veto message states that the mandated local referendum is too narrow, only allowing voters to repeal the use tax for out-of-state retail auto sales but not for out-of-state private sales. Gov. Nixon also pointed out language that he believes would give voters the ability to repeal taxes on all vehicle sales, including both out-of-state and in-state sales.