Missouri Budget Project Opposes Amendment 4

The Missouri Budget Project opposes this amendment because of the many unintended consequences that would result from creating a constitutional limit on Missouri’s sales tax, including the following:

1. Missouri’s sales tax law would never be able to adjust to the changing economy. For example, Missourians used to access music by purchasing records at the local record store. Record, CDs and tapes are all subject to sales tax. But, with the development of digital music, more and more Missourians are accessing their music as downloads, and rarely purchase records anymore. These downloads are not currently subject to sales tax, and the amendment would prohibit the sales tax from ever applying to downloads simply because they aren’t currently subject to tax. The same is true for videos, computer software, and other technological advancements that we aren’t even aware of yet.

2. Amendment 4 would compromise Missouri’s ability to invest in education, health, public safety, transportation and other critical public services.Because the measure is a constitutional restriction, over time, as Missouri’s economy continues to change, this amendment will likely result in a significant erosion of the sales tax base, and compromise Missouri’s ability to invest in public services, like quality schools and safe neighborhoods. The sales tax supports over 22 percent of Missouri’s state general revenue budget in the current year. The amendment would destabilize this key component of Missouri’s ability to fund public services, and is likely to result in either budget cuts or require large increases in the sales tax rate to make up for the limited base.

3. Amendment 4 would also undermine funding for State Parks, Soil and Water, and Conservation. It’s somewhat ironic that Amendment 4 is on the same ballot as Amendment 1, the renewal of Missouri’s dedicated sales taxes for the maintenance of state parks, soil and water. In the same way that Amendment 4 would undermine Missouri’s general revenue sales tax, it would also undermine the sales tax base for dedicated funding streams including funding for our parks, soil and water as provided in Amendment 1, as well as Missouri’s separate conservation sales tax of that was approved by voters in 1976.

4. Amendment 4 will likely result in local property tax increases. Municipalities throughout the state rely on the local sales tax to fund their services. If this funding source is eroded, municipalities may be forced to turn to increases in property taxes to make up the difference.

5. Amendment 4 makes a phony promise. Backers of the amendment claim they are protecting Missourians from threats to extend sales taxes to services that Missourians use every day, like child care, rent, health care and funerals. But, there are no current efforts in Missouri to tax these or other services in Missouri. In fact, real estate transactions are already prohibited from sales tax due to a 2010 ballot measure promoted by the Realtors Association. More significantly, because of existing constitutional requirements, any proposals to extend sales tax to services in Missouri would require a vote of the people.