March 4, 2025 - The House Special Committee on Intergovernmental Affairs voted last night AGAINST HB 321, a proposal by Rep. Bryant Wolfin to eliminate the local sales and use tax exemption for inputs in the manufacturing, mining, processing, compounding or producing a product. Associated Industries of Missouri had opposed the bill and asked each member to vote against the measure.
In testimony before the committee and in public and private meetings, AIM president and CEO Ray McCarty explained the reason for the exemption, the fact it would be a $35 million tax increase on Missouri manufacturers, mining operations, and others, and that passage of the bill could place Missouri's ability to tax internet sales at risk.
McCarty explained the Wayfair v. South Dakota decision to the committee. The U.S. Supreme Court overruled previous cases and allowed states to impose their sales/use taxes on internet sales made by retailers with no locations or sufficient contact with their state. This decision was partially based on the fact that South Dakota had adopted the Streamlined Sales Tax Agreement that requires uniformity of the state and local tax bases, meaning an exemption from state tax must also apply to local taxes. McCarty explained if an out-of-state retailer raised that argument, it is possible Missouri could lose the ability to collect internet use taxes which would result in a loss of $264 million for cities and $106 million for counties that presently have a local use tax and a similar loss would be realized by the state. He explained that was the reason the exemption was made a full state and local exemption in the so-called "Wayfair" bill.
A Ste. Genevieve County Associate Commissioner testified in favor of the bill eliminating the exemption, saying the local government had been unable to pass a local use tax as voters had rejected it twice. He said the local government had issued bonds for a community center and water park and the local government had depended on the revenue from the local sales tax on manufacturing inputs to pay for the bonds. McCarty noted in his testimony that the exemption was effective 1/1/2023 and that the provision was enacted in 2021 - four years ago!
Unless the vote is reconsidered, the bill is dead. An identical bill was scheduled for hearing last week but the hearing was canceled.
Comments