OK, so this is a tough one. In my last column, I asked the question: When is a tax a tax, and when is it a penalty? As we saw from the Supreme Court decision on the Affordable Care Act, it depends on how you want to spin it.
The same can be said for House Bill 1329 passed by the Missouri General Assembly and subsequently vetoed by the governor.
In this particular case, there is no doubt that the issue in question is a tax. The bill has to do with the definition of where the sale of a motor vehicle, trailer, boat or outboard motor was actually consummated. The real issue is where, or even if, taxes will be paid on such purchases.
Since this issue came about after my departure from the Legislature, I did a little research and called some folks so I could better understand how we had gotten to this point. Here’s what I found out: Decades ago when an individual bought a vehicle, they had to pay all the sales taxes at the dealer location at the time of sale. Sometime in the 1980s it was changed so that buyers paid the taxes later, when the car was tagged.
That process stayed the same until about two years ago, when an individual bought a boat in a state that didn’t have a sales tax, and then sued so that they would not have to pay their local sales taxes on the purchase. The Supreme Court subsequently ruled in the buyer’s favor, saying that purchases of this type made out of state were ineligible for the collection of local sales taxes.
This is a big deal to many local government entities because it hits the border cities the hardest. Folks can drive a few miles into another state and save having to pay local sales taxes on large purchases. So, the General Assembly passed House Bill 1329 by an overwhelming margin (House 122-21 and Senate 32-0). The bill codified in state statutes what was the interpretation for decades prior to the Supreme Court decision.
Here’s where it gets sticky. The governor vetoed the bill, saying the bill would attempt to impose a new tax without a vote of the people. And you can definitely spin the legislation in that manner. Of course, the converse can be argued: That the tax had been collected for decades, and in reality, the legislature was merely reinstituting a tax that had been in place for years and years.
I was fond of the old saying in the Legislature that there were always three sides to every story — my side, your side and the right side. Sometimes the right side lined up with one or the other, but often times the right side was somewhere in the middle.
In this case, it’s really hard to determine what is that right side. On one side, you have local government entities that have received these sales taxes for decades, which are now are going to be losing up to hundreds of thousands of dollars used to help deliver services to citizens. On the other side, you have consumers who now don’t have to pay local sales taxes if they buy their vehicles out of state, allowing them to save a substantial amount on a large purchase.
With veto session coming up in September, the General Assembly will get the last word on this issue. It takes 109 votes in the House and 23 votes in the Senate to override a gubernatorial veto. If you just look at the numbers you would think that this would be a slam dunk for an override, but it’s an election year folks, so look to see a lot of spin on this political battle.
Kevin Wilson lives in Neosho. He is a former state representative.