Municipalities are warning of a dire financial situation following the COVID-19 outbreak because of the Missouri legislature's failure to introduce a statewide e-commerce use tax on online sales.
Approximately 90 percent of items sold via websites to Missourians are not subject to a tax because they are sold and shipped by out-of-state third parties, according to the Missouri Municipal League.
The coronavirus has led to a huge surge in spending online as many local stores shuttered, prompting the league to warn of "dire financial problems" and even bankruptcy because of the lack of an end use tax.
A number of bills proposing such a tax were filed in the Missouri General Assembly this session, but it is not clear whether any will pass.
While there is widespread support among all interest groups, some legislators argue that it should be offset by a cut in other taxes, including income, Richard Sheets, the municipal's league deputy director, told the St. Louis Record.
Following a 2018 U.S. Supreme Court decision, in the case of South Dakota v. Wayfair, 43 of 45 states with statewide sales taxes introduced legislation to collect on online purchases. Missouri and Florida are the only hold outs.
"It is kind of frustrating because it is widely supported, including by the Chamber of Commerce, retailers, every interest group," said Sheets.
"There is no real opposition but other issues that are complicating the situation as some legislators want to describe it as a new tax and have an offset."
Sheets said there is still a chance that a bill, possibly SB 529, which is supported by Gov. Mike Parson, will pass this session, which restarted April 27. SB 529 was placed last week on the informal calendar, which can be reintroduced at any time, Sheets said.
“Now more than ever, we need the Missouri General Assembly to close the online use tax loophole and level the playing field for our shopkeepers who are struggling right now,” Columbia Mayor, Brian Treece, said in a statement. “The current pandemic has altered consumer spending while dramatically increasing the demands of local government.
Callaway County Presiding Commissioner Gary Jungermann added, "The failure of the Missouri legislature to pass an e-commerce use tax has the potential to bankrupt local governments across the state because of the COVID-19 shutdown."