The Northeast Missouri Economic Development Council has approved sending a letter to Missouri Gov. Jay Nixon, urging him to sign legislation that would resolve a situation that could negatively impact local auto and boat dealerships.
“This is serious. I’m concerned for businesses such as Boland, Poage and Jack’s Harbor Marine,” Hannibal City Manager Jeff LaGarce told the group. “It’s an economic development issue.”
LaGarce’s concern stems from a recent state Supreme Court ruling. A Greene County man objected to paying local sales taxes on a boat, motor and trailer that he purchased in Maryland and brought into Missouri. The high court ruled state sales taxes only apply to purchases made within the state.
Before the court ruling, Missourians paid sales taxes on vehicle purchases in their home communities during registration. Now local sales taxes cannot be levied for purchases made in other states, but communities can charge a local use tax if voters have enacted one. Currently, 39 counties, including Marion, Ralls, Monroe, Shelby and Lewis counties, have a use tax.
“It (court’s ruling) has no effect on us since we have a local use tax,” said Marion County Presiding Commissioner Lyndon Bode, estimating the county approved a use tax roughly a decade ago.
In addition to local businesses, that could see potential buyers head to Illinois or Iowa to buy a car or boat, the Supreme Court’s decision could reduce revenue collected in the city of Hannibal, which does not have a use tax. According to Doug Warren, finance director for Hannibal, the Government Financial Officials Association is estimating the ruling could cost Hannibal approximately $80,000 a year.
“That’s a tremendous hit,” said Warren, adding the court’s ruling “just amazes me.” “In every state I can think of you can’t run across the border, buy something, and not pay taxes of the local state.”
A potential legislative solution is working its way through the General Assembly, whose session ends Friday, May 18. Reportedly, a bill addressing the situation was passed by the Senate Wednesday and sent back to the House.
“It is crucial to close this loophole opened by the Supreme Court to preserve our automobile and boat dealers in Missouri,” said LaGarce. “We have several large dealers in Hannibal who could be greatly affected. They provide quality products and services, are good corporate citizens, and provide jobs for many local people. They can be hurt drastically if this new loophole is not closed by the Legislature and governor.”
While there is no impact on Marion County, Bode hopes the loophole is closed.
“We support something clearing up the issue because it could hurt car and boat dealers in the county,” he said. “We’d rather see things fair and even.”
Will the governor sign such a bill if makes it to his desk? A spokesman for Nixon isn’t committing.
“We wouldn’t have a comment on the bill as it still goes through the legislative process,” said Scott Holste, Nixon’s press secretary, Wednesday afternoon.
(The Associated Press contributed to this story.)