JEFFERSON CITY — After years of failure, Missouri lawmakers are inching closer to joining 48 other states that levy a sales tax on online goods.
Members of the House Ways and Means Committee heard debate on a Senate proposal that would establish the sales tax and reduce the state’s top income tax rate in an attempt to make the change revenue neutral.
Supporters of the online sales tax provision, commonly referred to as a “Wayfair tax,” say the change would help the state’s brick-and-mortar stores by taking away the tax advantage held by out-of-state online sellers.
“Literally, we say you can have a tax break if you go to a non-Missouri business,” said Sen. Andrew Koenig, R-Manchester, who is sponsoring the legislation.
Following a U.S. Supreme Court decision in 2018 allowing such collections, Missouri remains one of two states without them.
Despite ongoing calls by Gov. Mike Parson and other leaders, the GOP-controlled Legislature has not approved the tax.
In a conference call with mayors in February, a frustrated Parson said lawmakers should “pass the dang bill.”
Missouri business groups also back the proposal.
“We implore you to work this through and get this done,” said David Overfelt of the Missouri Retailers Association.
Local government officials also have urged lawmakers to approve the plan. The city of St. Louis, the St. Louis Zoo, Chesterfield and St. Charles are among those that support the plan.
A fiscal analysis shows local governments could see an overall increase of $26 million in revenue once the law is fully implemented in 2028.
The state, however, could see an overall drop of $185 million in revenue by 2028 due largely to the phased-in decrease in the income tax rate.
That drew the attention of Democrats, who raised concerns about having to cut funding to important programs.
“There’s just a concern for me that general revenue is going to take a hit. And that won’t hit until we’re all out of office,” said Rep. Trish Gunby, D-Manchester.
“I think lowering taxes for everyone is good policy,” Koenig said.
In addition to the sales tax changes, the legislation also includes a state earned income tax credit for low-income Missourians that would amount to 20% of the amount allowed in the federal earned income tax credit.
“It was a compromise that was made to get this through the Senate,” Koenig told members of the committee.
The legislation differs from a similar bill that has won House approval.
The House version, for example, includes a provision requiring local voters to weigh in on local use taxes. Koenig said the process would be too unwieldy to implement and potentially unconstitutional.
“There’s no way we’d be able to pass that in the Senate,” Koenig said.
The House sponsor, Rep. J. Eggleston, R-Maysville, said a final version may include some additional changes.
“I have felt more optimistic than any prior year,” Eggleston said.
The package awaits a formal vote in the committee before it can be heard by the full House.