JEFFERSON CITY — Missouri drivers who avoid paying sales taxes on automobiles have driven down state revenue by $90 million, Revenue Director Carol Fisher said Monday. One proposed way to counter that funding leak has met with mixed reviews, Fisher said.
Some Missouri drivers have eluded sales taxes by stealing license plates from other drivers who have proper tags, Fisher said. Others drive with expired tags.
Drivers refusing to pay sales taxes, which are due within 30 days of purchasing a vehicle, and annual registration fees have created the outstanding tax debt, Fisher said.
Raising initial cost
The Department of Revenue has raised the idea of requiring buyers to pay sales taxes at the time of purchase. This would help remedy the problem, Fisher said, but it would apply only to people who buy their cars from dealerships; it would not apply to purchases from individuals.
Upfront sales taxes would hurt sales, said Mark Alley, sales manager of Perry Chevrolet in Columbia. Customers would have to pay significantly more money at the time of purchase because most finance their vehicles in monthly payments and pay little upfront, he said.
Alley called for stricter laws for those who don’t pay sales taxes.
“It would be up to the state to crack down on these people,” Alley said. “Harsher penalties, I’m always in favor of those.”
Alley said he too has been burned by people not paying sales taxes. When customers don’t pay their sales taxes and then trade in their cars to dealers, the dealers become responsible for those debts. His dealership is instituting a policy requiring titles for trade-ins, Alley said.
Finding a compromise
Fisher has spoken with automobile dealers at conventions and has found that about 25 percent favor paying sales taxes upfront, 25 percent oppose the idea and the rest don’t know what to think about it, she said at a Tax Policy Committee hearing Monday.
Sales taxes are difficult to enforce, Fisher said at the hearing. License tags are difficult to read from patrol cars and many police officers have more pressing crimes to pursue.
At any rate, Missourians are driving around tax-free for the lives of their cars or until they move to another state, “and they’re using our roads,” Fisher said.