JEFFERSON CITY, Mo. — Missouri's Republican-Legislature on Thursday passed several bills to revamp the state's tax structure, including measures to collect online sales taxes and raise the gas tax.
Both the House and Senate advanced competing bills to require out-of-state online businesses to collect sales taxes on purchases by Missourians. The requirement would only apply to businesses that make at least $100,000 a year in online sales to Missouri residents.
Department of Revenue officials estimated that the change would bring in as much as $190 million in state revenue by 2027 and another $70,000 in local tax revenue.
Both versions of the bill would partly offset the revenue increase with slight income tax cuts. The Senate bill also includes a tax credit for low-income working families.
Republican and Democratic Senate leaders praised their bipartisan approach to the sales-and-income-tax legislation. Republican Sen. Andrew Koenig said the legislation “simplifies our tax system.”
“Right now, without (the legislation), we have an incentive for people to make purchases from non-Missouri businesses,” Koenig said. “That’s one of the worst things you can have in a tax code.”
Senate Minority Leader John Rizzo said local governments could get a windfall from the sales tax provisions that he says should allow local businesses to better compete with online retailers.
“The competitive factor of brick and motor stores, mom-and-pop stores, verses online — that gap will get closer,” Rizzo said.
Lawmakers have been trying to pass a bill to require online sales tax collections for years, but the efforts face pushback from Republicans concerned about the appearance of raising taxes.
Republican Gov. Mike Parson is pushing lawmakers to get the proposal across the finish line this year.
“I’m just thankful they passed it in some form or some fashion,” Parson said. “I simply want to start making the playing field fair for our Missouri businesses that have to compete with out-of-state businesses.”
Another divisive tax bill that would raise Missouri's 17-cent gas tax for the first time in decades passed the Senate 21-13 on Thursday.
The legislation would phase in a tax increase of 12.5 cents per gallon by 2025. Drivers could get a rebate for the tax hike if they keep their gas receipts.
Senate President Pro Tem Dave Schatz, who sponsored the bill, said the phased-in increase is “the most reasonable way” to help close what he described as a more than $800 million annual gap in road-funding needs. Providing an option for motorists to seek refunds on the new tax offers “the best of both worlds” for people concerned about higher taxes or deteriorating infrastructure, he said.
Fellow Republican Sen. Denny Hoskins said Missouri should instead tap into general revenues, federal coronavirus relief funds or savings from other program cuts to boost funding for roads and bridges.
“I have a hard time voting for a gas tax when we are flush with money this year,” Hoskins said.
The gas tax legislation passed with bipartisan support — 12 Republicans and nine Democrats vote for it while 12 other Republicans and one Democrat voted against it.
Ballentine reported from Columbia, Missouri.