Gov. Nixon signs tax legislation for vehicles bought privately and outside Missouri

Friday, July 5, 2013 | 4:20 p.m. CDT; updated 5:36 p.m. CDT, Friday, July 5, 2013

JEFFERSON CITY — Some Missouri residents no longer can gain a tax break by buying a vehicle from an out-of-state dealer or an individual with a for-sale sign in the window.

Gov. Jay Nixon enacted a law Friday that immediately reinstates local vehicle taxes for numerous cities and counties that have been unable to tax cars, trucks and boats since a state Supreme Court ruling more than a year ago.

Nixon twice vetoed previous bills that sought to reimpose the local vehicle taxes. His office said in a brief written statement that the previous bills "did not sufficiently protect Missourians' right to vote on tax policy," but that the most recent version "addresses these concerns by requiring a public vote in local jurisdictions without a local use tax."

Some Illinois vehicle dealers in the St. Louis area had targeted Missouri consumers with the prospect of a tax break. Retailers in some other Missouri border cities also had seen more customers go elsewhere.

"We were the only state where there was an advantage for the citizens of the state to not make purchases in the state," said Sam Barbee, president and CEO of the Missouri Automobile Dealers Association.

Cities and counties also had backed the legislation, because they had been losing tax revenues. But Friday marked only a partial victory for the Missouri Municipal League. That's because the governor also signed a bill limiting the ability of governmental entities to restrict cellphone towers, which it had urged him to veto.

The vehicle tax legislation is a response to a January 2012 state Supreme Court ruling. The court said Greene County could not charge a local sales tax on a man who bought a boat from a dealer in Maryland. The ruling drew a distinction between sales taxes, which are collected from in-state retailers, and use taxes, which are levied on products used in Missouri but bought either from an out-of-state retailer or from someone who does not run a business.

The Supreme Court said Greene County could not tax the boat because it wasn't covered by the local sales tax and county voters had not approved a local use tax.

The ruling had broad implications because a little less than half of Missouri's 114 counties and most of its municipalities had no voter-approved use tax.

The new law seeks to sidestep questions about the location and manner in which a vehicle is bought by redefining vehicle sales taxes to apply to the act of titling vehicles. The newly defined tax kicks in immediately. Within the next two years, local governments that did not previously have a voter-approved use tax must give voters a chance to repeal the titling sales tax for vehicles bought out of state or from individuals.

Though legislative supporters are confident about the new approach, some attorneys have raised concerns that the measure still could violate state constitutional provisions by imposing a local tax prior to voter approval.

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