A manicure is one of many services that could never be subject to Missouri's sales tax if Amendment 4 is passed by voters.
Cigarette tax increases, voter I.D., and campaign contribution limits have gotten the lion’s share of media attention this election cycle. Not so much Amendment 4, the “Taxpayer Protection Amendment,” but both supporters and opponents agree it’s a measure that could have massive financial implications for consumers and small businesses alike.
The Missouri legislature has attempted to pass a tax on services every year for the last seven years, and last year, came close to getting a bill to the Governor’s desk. Scott Charton, a spokesman for Missourians for Fair Taxation, calls that “too close for comfort.”
If the sales tax were expanded to include services, Charton points to everything from haircuts to dry cleaning, car repairs, medical services, massages and physical therapy, graphic design, and even tattoos, that would cost consumers an increased 4.2 to 9.6 percent, depending on the municipal tax rate. Not to mention delivery services for pizza or flowers, yoga and dance classes, healthcare, veterinarian care, accounting, real estate, landscaping, hospice, funeral services, mental health or drug and alcohol counseling, and even an extra tax on tips for those in the food and beverage industry … it's potentially a huge source of revenue for the government, at a huge cost to consumers.
“We feel that’s overreach,” he said at a public forum held by St. Louis Public Radio earlier this week. For lower- and middle-class consumers, the disabled and elderly on fixed incomes, he says, an additional tax on intangible goods in addition to the current sales tax would be “a double whammy.”
Some supporters see the amendment as a way to block big-money activists like Rex Sinquefield. The billionaire financier has spent millions to push the idea of replacing income taxes with sales taxes. Limiting what goods and services can be taxed, they believe, is one way to head off such plans.
But not everyone is in agreement that this amendment is the best solution.
Amy Blouin, head of the Missouri Budget Project, was also at the forum. She warns that amending the constitution goes too far and might have unintended consequences.
“Because this is a constitutional amendment, it doesn’t mean we have protection since another amendment could go to a vote,” Blouin said. “This doesn’t give the protection people think it does.”
Blouin stresses that her organization is not in favor of expanding taxes, and agrees it would burden lower-class families, but urges there are other ways to put protections in place without going so far as to amend the constitution.
An amendment like this could cut into state revenues for things like internet purchases, she warns, and might impact the state’s economy as technology continues to change the way we buy things. And cutting into sales tax growth could result in municipalities increasing property taxes to make up the difference.
The Missouri Municipal League is also against the measure, concerned that the wording of the amendment could be misinterpreted in court.
Accountants who have studied the measure agree that it could spare consumers from billions of dollars in tax payments each year, though no official fiscal impact has been attached to the measure.
But the list of Amendment 4 supporters is long, presumably because they have the most to lose if a tax on services became law.
“Consumers would be hard-hit by a new sales tax on services, and new costs and red tape for businesses would harm Missouri’s economy,” said Chuck Pierce, CPA, former Deputy State Auditor and Government Relations for the Missouri Society of Certified Public Accountants.
The NFIB, the National Federation of Independent Businesses, says a new sales tax on services would “raise everyone’s costs and kill jobs.”
More than two dozen professional and business organizations in Missouri endorsing Amendment 4 include: the Missouri Automobile Dealers Association, the Missouri Cattleman’s Association, the Missouri Restaurant Association, and the Missouri Association of Realtors.
Amendment 4 requires only a simple majority — 50.1 percent — to become law; voters would have to vote to repeal the amendment to reverse protections against a tax on services in the future.