Shoppers face inconsistent sales tax breaks

No state sales tax will be charged Aug. 13-15, but some cities and counties keep their local sales taxes.
Wednesday, July 14, 2004 | 12:00 a.m. CDT; updated 7:18 p.m. CDT, Thursday, July 17, 2008

JEFFERSON CITY — Shoppers looking for back-to-school bargains could save more in some parts of Missouri than others due to the patchwork application of a sales tax break next month.

Under a one-time state law, Missouri will waive its sales tax Aug. 13-15 for school-related items such as clothes, backpacks and computers. But cities, counties and other tax districts can choose to charge their local sales taxes anyway. And many will be doing so.

Columbia, Boone County and Ashland all decided months ago to opt out of the sales tax holiday. Columbia officials estimated at the time that the tax break might cost the city thousands of dollars per day.

Sales tax comprises about 60 percent of the county’s revenue and about 28 percent of Columbia’s general fund revenue.

More than half of Missouri’s counties (65 of 114) and nearly one-third of its taxing cities (175 of 571) have opted not to provide a local tax break on top of the state one, according to information supplied Tuesday by the state Department of Revenue. Local governments had until last Friday to notify the state they would not be participating in the “sales tax holiday.”

Local governments opting against the tax breaks fear the three-day revenue loss could hurt their budgets. But business groups, such as the Missouri Chamber of Commerce and Industry, contend the special promotion should also boost sales of nonschool items, offsetting any losses to governments while spurring the economy.

In the end, the mixture of tax breaks could confuse both retailers and customers.

Because of time and technological constraints, “there is a good deal of retailers — probably the majority — that aren’t going to have their systems programmed to do it, if their systems can even handle” the different local and state tax rates for certain items, said David Overfelt, president of the Missouri Retailers Association.

Most cash registers have buttons for no-tax sales, Overfelt said. But in jurisdictions where only the state tax will be waived, retailers may have to get creative to collect the local tax.

Shoppers also may have difficulty — especially in urban areas — determining which stores are still collecting local sales tax.

Kansas City, for example, straddles parts of three counties and will not charge a city sales tax. Neither will Jackson or Platte counties. But Clay County will charge its local tax. Plus, some suburban cities in each county will charge sales tax.

In the St. Louis area, the city and county will waive their sales taxes but some suburbs will charge theirs anyway.

The city of Hazelwood initially told the state it would charge a local sales tax, then reversed its decision after considering that its St. Louis Mills shopping mall could — if it had to collect the city tax — be at a competitive disadvantage with other malls in unincorporated parts of the county, said city manager Ed Carlstrom.

Yet Hazelwood’s neighboring city of Florissant will continue to charge its local sales tax — even while the state and county does not.

“All the cities are hurting right now, and cutting a couple of days of sales tax out is not a good thing. We need our revenue,” said city clerk Karen Raftery.

Shoppers in Springfield, the state’s third-largest metropolitan area, will get only the state’s 4.225 percent sales tax break, because both the city and county will continue to charge sales taxes. The same is true for shoppers in Columbia, Jefferson City, Joplin and St. Joseph.

But shoppers in the border cities of Cape Girardeau and Hannibal will get a full sales tax break — just like consumers in downtown Kansas City and St. Louis.

Senate President Pro Tem Peter Kinder, who sponsored the 2003 legislation authorizing the school shopping tax breaks, said he was disappointed so many local governments had chosen not to participate. “It’s disgusting and to be frowned on,” said Kinder, R-Cape Girardeau.

Added bill supporter, Senate Minority Leader Ken Jacob, D-Columbia: “My hunch is people will go to those places where they can get the break and buy stuff, and that will be a windfall for them, and the other places will regret it.”

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