SWMO Realtors seek to prevent sales tax on services

Renovating a house sometimes can turn into a money pit, but what about buying one? When every service involved comes with its own sales tax, the pit can quickly turn into an abyss.

That’s the type of situation the Missourians for Fair Taxation campaign wants to prevent. With less than 50 days until the Nov. 8 general election, the group is kicking into high gear promoting the passage of Amendment 4.

Also called the taxpayer protection amendment, voter approval in November would prohibit new sales taxes imposed by local or state governments on services. Missourians for Fair Taxation spokesman Scott Charton said potential taxes range from banking to tattoo work, haircuts to accounting, and conceivably most any activity in between that isn’t a tangible good.

“Think of all the services that go into a home – new construction, especially,” Charton said. “Expand beyond that to services families use every day: haircuts, day care, paying rent. Think about business accounting, lawyering, banking – everything they do is a service.”

With enough petition signatures gained to receive a place on the ballot and an amendment number in August, the campaign is in full swing. Missourians for Fair Taxation kicked off a statewide tour Sept. 12 in Springfield at the offices of the Greater Springfield Board of Realty, one of 34 similar stops at local Realtor associations around the state the group plans to make before Election Day.

Angie Mullings, chairwoman of GSBOR’s Amendment 4 committee, leads the local effort to inform a list of businesses, including nail salons, lawn care and dry cleaners.

“Politics are local, so we’re tasked with the grassroots efforts,” said Mullings, who also owns Century 21 Integrity Group. “When it comes down to it, that’s typically what helps people win elections and campaigns.”

Preventative measures
Charton traces the movement to ban sales tax on services to 2010 with the Missouri Association of Realtors, when the group proposed a state constitutional amendment to ban transfer taxes on real estate transactions. The amendment passed with 83.7 percent voter approval.

Although there’s no pending maneuver to implement a sales tax on services, Charton said a combination of signs are leading those opposed to make a similar pre-emptive strike now. “That concept has been introduced each of the last seven legislative sessions,” Charton said. “In Missouri, very often things get introduced multiple times. They have to settle in and gain acceptance.”

Adding to concern is billionaire and political donor Rex Sinquefield’s support for expanding the sales tax to services to supplant an eventual repeal of the state’s income tax. Following the Missouri Supreme Court’s January 2015 decision in Alberici Constructors Inc. v. Director of Revenue, the Missouri Department of Revenue issued notice to businesses that delivery charges also could be subject to tax when related to the sale of tangible goods.

Missouri isn’t the only battleground where politicians are considering the taxed services maneuver. Oklahoma Gov. Mary Fallin proposed the idea during a spring legislative session to help fill in billions in revenue lost by the state’s slumping oil industry. North Carolina and Washington already expanded the sales tax to cover such services as repairs and installations.

“That’s what we’re trying to head off in Missouri,” Charton added. “It’s not front of mind for people because we don’t now collect it, but many people don’t know about these factors coming together. You don’t wait until your house is on fire to buy a fire extinguisher.”

On the city side, Springfield officials are aware, said interim Finance Director David Holtmann, but they’re not in favor of handcuffing the option of pursuing new sales or use taxes on services and transactions.

“Any time there is restrictive legislation, that limits an entity’s ability to develop any sort of future stream for funding,” he said, emphasizing any new tax would first need voter approval.

Supporting cast
Charton said support behind passage of Amendment 4 is growing. While the Missouri Association of Realtors has spearheaded the effort toward awareness, the breadth of businesses potentially affected can be see in the other groups voicing their support for the campaign: National Federation for Independent Business, Missouri Independent Bankers Association, Missouri Funeral Directors and Embalmers Association, Missouri Press Association and Missouri Cattlemen’s Association.

Dollars, too, are rolling into campaign coffers. As of the most recently available finance reports from the Missouri Ethics Commission, Missourians for Fair Taxation received roughly $741,375 in support. Charton said more recent contributions made include $200,000 from Missouri Bankers Association and $5,000 from Missouri Broadcasters Association.

Mullings said the Springfield rally was the first exposure many of the 100 attendees had to the issue, but she hopes the GSBOR committee can garner more endorsements from local organizations.

“We’re trying to do that on a local level with the appraisers, inspectors, lenders, in addition to all the services we just use on a day-to-day basis,” Mullings said. “To my knowledge, there isn’t any organized opposition to us at this point. The response has been overwhelmingly positive.”