Proposed amendment would ban sales tax on services and transactions

Missouri residents will soon vote on a proposed amendment that would ban sales tax on services and transactions.

Amendment 4 will be on the November ballot. If passed, it would prevent the state of Missouri from taxing services such as hair cuts, car repairs or yoga classes.

Right now, consumers do not pay sales tax on these services. For example, an auto body shop can tax the parts required to fix a car, but they cannot tax the customer for labor costs.

Missourians For Fair Taxation say the amendment will help protect Missouri residents. They say they want to prevent our state from taxing residents for a broad range of services.

“It will protect Missouri families, individuals and businesses from having to pay a new sales tax on services that we all use everyday,” Scott Charton, spokesperson for Missourian’s For Fair Taxation tells ABC 17 News.

Opponents, however, are concerned the word “transaction” is too vague.

“Transactions are mentioned in this constitutional amendment but there’s no definition of transaction…we’re concerned the courts will decide in the future–near future–to define transaction more narrowly and that would affect local and state revenue,” Richard Sheets, Deputy Director of the Missouri Municipal League explains.

If the word transaction is defined too narrowly, opponents of the amendment say it could have a direct impact on local revenue.

“Where are cities going to get their revenue?” Sheets questions, adding, “They’re either going to cut services or raise the property tax.”

Supporters say the word transaction is already defined in the dictionary and stress that the amendment will have no effect on any current sales tax.

“Transactions refers back, if you go in the dictionary, to the deal that you make, the sale that you make. It’s tied to sales and we specify that it’s services…amendment four does not affect any existing tax goods,” Charton explains.

As for an imminent threat with regards to the taxation of services? Supporters and opponents of the amendment disagree on this aspect, too.

“It’s an ongoing threat now that’s already reaching into Missourian’s wallets. The Missouri Department of Revenue…has taken it upon itself to interpret the laws on defining what is a service. They have already extended the tax to yoga and dance studios,” Charton says.

Sheets begs to differ. “There is no serious attempt to expand our sales tax into the area of services,” he says. “It was attempted five or six years ago, it was defeated. There wasn’t any legislation last year…this is really a solution looking for a problem.

Amendment 4 will be on the ballot on November 8. Here is a link to the ballot language.