JEFFERSON CITY — The Missouri House gave first-round approval Tuesday to a plan to tax online purchases.
The proposal, which is a top priority of Republican Gov. Mike Parson, would require companies to charge sales taxes when people use the internet to shop, but it may not result in a significant boost in revenue for the state.
The plan, sponsored by Rep. J. Eggleston, R-Maysville, offsets the projected increase in revenue by further lowering the state’s income tax rate to 4.9% by 2027.
“This bill softens the blows for our consumers so they don’t get hit with a big tax increase,” Eggleston said.
A fiscal note attached to the bill, however, says local governments would see a $71 million increase in revenue.
Despite ongoing calls by Parson and other leaders, the GOP-controlled Legislature has not approved the so-called “Wayfair” tax, which is named for a leading online furniture and home-goods retailer.
The governor says it would level the playing field between brick-and-mortar stores and their e-commerce competitors.
Last month, in a conference call with mayors, Parson said lawmakers should “pass the dang bill.”
Parson has sought to use proceeds from an online sales tax to create a special nest egg for financial emergencies. The money, he said, could be used to pay off debt and pay for infrastructure programs done on a cost-share basis.
Lawmakers have rebuffed the governor on the idea.
Following a U.S. Supreme Court decision in 2018 allowing such collections, Missouri remains one of two states without them.
Republicans who control the House and Senate have pledged to approve a plan that is revenue neutral, but have been unable to bring all the pieces together.
At least one lawmaker didn’t buy the idea that taxes wouldn’t rise.
“I was elected to lower taxes and therefore I am against this bill,” said Rep. Brian Seitz, R-Branson.
Tuesday’s debate came against the backdrop of a pandemic that has altered the shopping habits of millions of American. Closures and limits on capacity in retail stores have sent people to their phones and computers to order goods.
An analysis of the legislation says it remains unclear if the trend toward online shopping will continue once the pandemic ebbs.
In earlier testimony to a House committee, local government officials urged lawmakers to approve the plan.
“Long term fiscal sustainability requires that we expand our tax structure to capture online sales to support local services,” said Des Peres City Administrator Douglas Harms.
The city of St. Louis, the St. Louis Zoo, Chesterfield and St. Charles also support the plan.
Counties oppose the measure because it would require them to return to voters to approve a sales tax.
The Senate is considering similar legislation. Sen. Andrew Koenig, R-Manchester, has said it won’t pass without the same type of corresponding state income tax reduction triggers that the House proposal contains.
The legislation is House Bill 554.
Missouri and its local governments are especially exposed to this crisis. Unlike 48 other states, Missouri’s GOP-dominated legislature has not passed a bill to allow the collection of online sales tax.