The Missouri legislature again failed to pass legislation that would bring in millions of dollars for the state and local governments by collecting taxes on online sales.
Missouri requires residents to pay a use tax to the state if they've bought more than $2,000 worth of goods online from out-of-state retailers. But few online shoppers actually pay the use tax, and as a result, the state and local governments lose out on potential revenue.
Legislation that would implement a new way to collect this tax — placing the burden on online retailers such as Amazon and Wayfair to collect and remit the tax to the state, rather than relying on buyers to report and pay it themselves — didn't cross the finish line this legislative session.
The Missouri Budget Project, a nonpartisan budget policy group, estimated last year that collecting the tax could bring in an additional $95 million to the state and $85 million for local governments.
Proponents of online sales taxes also argue that they level the playing field between online retailers and brick-and-mortar stores. If an online retailer and a local business offer the same product at the same price before tax, the buyer is more likely to buy it online to avoid the sales tax.
Of the 45 states that collect sales tax, Missouri is one of only two states that hasn't enacted a "Wayfair" law, named after Wayfair v. South Dakota, the 2018 Supreme Court case that opened the door for states to collect taxes on online sales.
Gov. Mike Parson advocated for the legislation in his State of the State speech in January, proposing that the revenue brought in by the tax be directed to a new "cash operating expense fund" — essentially an emergency savings fund for the state.
Now, in the middle of an emergency due to the coronavirus pandemic, the Wayfair tax has been suggested as a way to increase revenue during an uncertain time.
"We're not imposing a new tax," said Sen. Lauren Arthur, D-Kansas City. "We're simply creating a mechanism to impose a tax that we should already be collecting."
Tax-averse Republican senators, including Sen. Andrew Koenig, R-Manchester, have argued that enacting Wayfair legislation is essentially enforcing a new tax, and over the past two years have refused to vote for the legislation without finding a way to cut taxes in other areas.
On Thursday, the Senate debated legislation that would pass Wayfair while also eliminating or reducing fees that cable companies pay to municipalities, exchanging one source of local government revenue for another.
"Senators feel it should be a break-even, not a moneymaker," said David Overfelt, a lobbyist and president of the Missouri Retailers Association. "The players all know these things, but the retailers are the ones that have to sit back and work in this environment where they’re being put at a disadvantage."
Ultimately, the Senate set aside the Wayfair bill without taking a vote and did not return to it before the end of session.
"This issue isn't going away; it's just a matter of when they will be back at it to try and address the issue," said Traci Gleason, spokeswoman for the Missouri Budget Project.