State Senate passes gas, ‘Wayfair’ tax bills

In its final meeting before the Missouri legislature’s spring recess, the state Senate passed a slew of bills, including two closely monitored pieces of tax legislation that could have a considerable impact on the state.

The slate of bills that passed Thursday covered a wide range of policy issues, from the regulation of needle-exchange programs to the use of public funds to influence elections. But the most high-profile bills to pass were ones raising Missouri’s fuel tax and another imposing an online sales tax in the state.

Their passage in the upper chamber Thursday marked the end of a lengthy legislative journey for both bills, which have the support of Gov. Mike Parson. Both would put Missouri tax policy more in line with the rest of the country if passed by the General Assembly.

Senate Bill 262 would gradually raise the state’s gas tax by 12.5 cents over the next four years, beginning with a 2.5-cent increase in October.

The bill, sponsored by Senate President Pro Tem Sen. Dave Schatz, R-Sullivan, would constitute a dramatic increase from Missouri’s current tax of 17.4 cents per gallon, which ranks as the second-lowest fuel tax in the country after Alaska.

The notion of raising the tax has divided state Republicans for years, and multiple previous efforts at a hike have failed.

This year’s legislation was no exception, as Republican senators debated the bill late into the evening Tuesday. That debate resulted in a slight decrease from Schatz’s originally proposed hike of 15 cents by 2027.

Schatz and other proponents have cited the need to fund repairs and maintenance of the state’s infrastructure as the main impetus for the bill. The American Society of Civil Engineers gave Missouri’s infrastructure a C- grade in 2018.

The bill ultimately passed Thursday by a vote of 21-13 with the Republican caucus’ most conservative members voting against it.

The other major tax bill to pass the Senate on Thursday, commonly referred to as a “Wayfair tax,” would place a sales tax on online goods purchased in Missouri.

No such tax currently exists in the state, which the bill’s sponsor Sen. Andrew Koenig, R-Manchester, and other proponents have argued places the state’s brick-and-mortar stores at a competitive disadvantage with online retailers.

“Right now, without Wayfair, we have an incentive for people to make purchases from non-Missouri businesses,” Koenig said. “Just from a tax standpoint, that’s one of the worst things you can have in a tax code.”

Koenig’s bill also includes reductions to the state’s top income tax rate and establishes a new earned-income tax credit.

A similar bill, House Bill 554, passed in the House on Thursday, as well. Koenig said whatever legislation ultimately passes the General Assembly will have to look more like his version in the Senate, citing concerns about “serious problems” with how the House bill proposes to implement the Wayfair tax.

Parson, in a news conference Thursday afternoon, declined to say which version he preferred.

“I’m just thankful they passed it, in some form, some fashion,” he said.