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JEFFERSON CITY, Mo. (AP) - Missouri Gov. Jay Nixon has vetoed legislation that sought to re-impose local sales taxes on vehicles bought from out-of-state dealers or through person-to-person sales.
Nixon's veto Friday marks the second time in two years he has rejected the Legislature's attempt to reverse the effect of a 2012 Supreme Court ruling.
The court ruled that local sales taxes can only be charged on vehicles bought from Missouri retailers. If cities and counties want to tax vehicles bought elsewhere, the court said they need to adopt local "use taxes."
The legislation vetoed by Nixon sought to get around that ruling by tying local sales taxes to the titling of vehicles. Local voters would have had a chance to repeal the taxes by 2016.
Nixon said the repeal section was not drafted well.
JEFFERSON CITY, Mo. (AP) - An organization that analyzes Missouri financial issues has begun running a radio ad against legislation that would cut state income taxes while raising the sales tax.
The Missouri Budget Project said Tuesday that this marks the first time in its 10-year history that the St. Louis-based nonprofit has paid for ads against a policy proposal.
The ad targets legislation scheduled for a House committee hearing Tuesday that would cut income taxes by three-quarters of a percentage point while increasing the sales tax by a half cent. The bill already has passed the Senate.
The Budget Project claims the measure could reduce state revenues by $960 million annually once fully implemented. Other legislative estimates have put the cost at almost half that amount.
Nixon said Thursday that the proposed one-half cent sales tax hike would be especially harmful to seniors and veterans on fixed incomes and also could also hurt working-class parents trying to provide for their children.
The bill given initial approval Wednesday night by the Republican-led Senate also includes a three-quarters of a percentage point decrease in the state income tax for individuals and businesses. That income tax cut would more than offset the sales tax hike, resulting in an estimated $450 million loss in state revenues once both tax changes are fully phased in.
The legislation needs another Senate vote before it can move to the House.
One proposal could require residents to pay a higher sales tax in order to pay for transportation projects, and another would let electric utilities seek a surcharge to recoup costs from infrastructure projects.
A third measure would call for issuing several hundred million dollars in bonds to fund improvements on college campuses and state facilities. Taxes that Missourians pay could go to paying off the bonds.
Lawmakers say the influx of ideas comes because there is a new willingness to discuss major challenges facing Missouri. They are skeptical everything would pass in the same year.
The estimate of lost tax revenues is being used by Sen. Mike Kehoe as one of his main arguments why lawmakers should enact a measure reinstating local taxes on vehicles bought from other states or sold in private deals between Missouri residents. The bill, which already has won initial Senate approval, is expected to receive a second vote this week that would send it to the House.
The legislation was prompted by a Missouri Supreme Court decision last year that said local sales taxes cannot be levied when vehicle purchases are made in another state. The ruling also applied to cars sold by one person to another, because sales taxes only can be collected from retail businesses. The court said a local "use tax" could be charged on such vehicles, but only if approved by local voters.
Almost all counties and municipalities had been collecting the tax on out-of-state vehicle sales before the Supreme Court's decision, but less than half had a voter-approved "use tax" and so have been unable to keep collecting the revenue.
State lawmakers reacted to the Supreme Court decision by passing a bill last May that would have allowed local governments to collect the tax. But Nixon vetoed the measure and said voters should have a say in whether the tax should be imposed. Some lawmakers launched an effort to override Nixon's veto over concerns that Missouri car dealers were at a competitive disadvantage, because customers were going out of state to avoid paying local vehicle taxes. The veto-override attempt ultimately failed.
Now lawmakers are trying again to re-instate the local taxes. "Who in their right mind would think it is right for the state of Missouri that we would tax our own local businesses, but not those out-of-state," said Sen. Jay Wasson, R-Nixa.
This year's Senate bill would try to alleviate the governor's concerns. Republican Sen. Mike Kehoe, a former Jefferson City car dealership owner, said it's a "new version for the same conversation."
The bill would allow local governments to start collecting the sales tax immediately after Nixon's signature. But it would also require local governments to put a "repeal" vote on the ballot sometime between November 2014 and November 2016 in which voters would be asked whether they want to keep the local tax.
Kehoe said he thought his bill would be a "bit more palatable" to Nixon than the version he vetoed, because it lets voters decide whether to keep the tax.
One Senator said she was "a little nervous" about how the bill would allow taxes to be collected immediately without voter approval. But Minority Leader Jolie Justus, D-Kansas City, said she still wants the bill's end result.
Since the issue has been unresolved, counties and municipalities lost $43 million in revenue between April and December 2012, according to figures compiled by Kehoe's office. During that period, $1.4 billion in motor vehicle sales were not subject to local sales taxes. Missouri dealers sold $5.1 billion worth of vehicles, which were subject to local taxes.
At the time of Nixon's veto, just 43 of Missouri's 114 counties and more than 90 of the roughly 950 municipalities had the ability to continue to collect a sales tax on cars not bought at Missouri dealers. Under the Senate bill, these local governments would not have to hold a "repeal" vote and currently can collect taxes on motor vehicles not purchased from Missouri car dealers. With Kehoe's bill still in the legislative process, some counties are looking to fix the problem on their own. At least 18 counties or municipalities have placed "use taxes" on the April ballot that would apply to vehicles sold in other states or between individuals, according to Americans for Prosperity, a group that advocates for lower taxes and limited government.
A Senate committee on Wednesday considered a proposal that would let local governments impose a tax. Voters then would decide whether to continue it.
The legislation seeks to reverse a Missouri Supreme Court ruling that local sales taxes cannot be charged on vehicles purchased out of state or in private transactions. Instead the high court said a local "use tax" could be charged if approved by local voters. Creating local use taxes have had mixed results before voters.
Supporters of the legislation say many cities and counties are losing tax revenue while vehicle dealers in bordering states now have an advantage over Missouri businesses.
Republican Mike Kehoe, of Jefferson City, and Democrat Ryan McKenna, of Crystal City, scheduled a news conference about the plan Tuesday along U.S. 50, several miles east of the of the state Capitol.
Missouri transportation officials say funding for construction and improvements fell from $1.2 billion to less than $700 million during the past year.
State Transportation Commission Chairman Rudy Farber called earlier this month for a temporary, 1-cent increase in the state sales tax to financelocal and state projects. Officials estimate the tax would generate $7.9 billion over its 10-year life.