Missouri lawmakers left town for the legislative spring break on Thursday after advancing legislation to increase the state’s gas tax and passing two versions of an internet sales tax.
Online tax legislation
The House and Senate passed their own versions of the so-called Wayfair tax bill, which allows state and local governments to impose a tax on online purchases. It would only apply to businesses that generate at least $100,000 a year in online sales in the state.
The sponsor of the legislation in the House is Rep. J. Eggleston, R-Maysville. He said the tax will level the playing field for brick-and-mortar businesses to compete with online stores.
“We will help our small businesses,” Eggleston said. “We will take care of our citizens. We will give local governments the opportunity to capitalize on Wayfair.”
The Senate version is sponsored by Sen. Andrew Koenig, R-Manchester, who said the proposal simplifies the tax system.
“Right now, without Wayfair, we have an incentive for people to make purchases from non-Missouri businesses,” Koenig said. “Just from a tax standpoint, that’s one of the worst things you can have in a tax code.”
But Koenig said he hopes it’s his version of the bill that makes it to Gov. Mike Parson’s desk. He said he sees serious issues with the lower chamber’s version, including the fact that some cities that already tax purchases would have to approve it again.
“One of the provisions they have in there with the use tax, they stack it so that every city would have to go back and vote on it again even if they already have a use tax,” Koenig said. “Mechanically, I just don’t know how you do that. How do you separate use tax that’s being collected today and use tax that’s being collected under the bill?”
Both versions include slight income tax cuts, and the Senate version also includes a tax credit for low-income families.
Rep. Peter Merideth, D-St. Louis, said he supports the idea of the Wayfair tax but was disappointed Republicans had to “muddy the waters” with the income tax cut. He said he would have preferred to discuss adjusting the sales tax, “not pushing us into a more regressive tax structure in our state, a tax structure that favors the rich and punishes the poor and puts more and more of the burden for paying the state’s bills on working folks.”
Republican Gov. Mike Parson, who has pushed lawmakers to get the bill across the finish line, said he was thankful that both chambers are getting closer to making it a fair tax environment for Missouri businesses. Senate President Pro Tem Dave Schatz said passing the legislation was “a long time coming,” as lawmakers have pushed for it for years, fighting the perception of a tax increase in a Republican-dominated legislature.
Gas tax increase
The Missouri Senate also passed legislation on Thursday that would raise the state’s gas tax.
The tax would go up 2.5 cents a year, starting in October 2021, until the increase is fully implemented in 2026.
Currently, the state has a 17 cents-per-gallon tax, which is the second lowest in the nation, behind Alaska. This legislation will increase that to 29.5 cents per gallon.
“Finally today we took action to adjust Missouri’s gas tax, to meet the economic reality that many of you heard us talk about,” said Schatz, who sponsored the legislation, which now goes to the House.
Schatz was referring to the robust debate held on the Senate floor on Tuesday, where he told the chamber that Missouri had the seventh-largest highway system but was 49th in the nation in funding. Schatz said the state exceeds $800 million in unfunded transportation needs on an annual basis, with a total of nearly $10 billion in unfunded needs.
The gas tax is expected to generate roughly an additional $460 million for the state’s roads and bridges.
“Increasing the gas tax was critical, but we also made this refundable,” Schatz said. “We are sensitive to individual Missourians' needs.”
The legislation includes an option for drivers to get a 100% rebate on the new tax if they save receipts for gas purchases, but only a fraction of Missourians are expected to take advantage of the refund.
The measure also increases the electric vehicle decal fee to ensure those motorists are paying an equivalent share.
Lawmakers praised the bipartisan efforts in both chambers on the tax bills, to find new funding streams for Missourians.
“It’s not every day you get a good chunk of Democrats and a good chunk of the Conservative Caucus to vote together on a tax bill,” said Senate Majority Leader Caleb Rowden, R-Columbia. “I think it is aimed where it’s supposed to be. Nobody’s getting greedy. Nobody’s doing too much.”
