The Kansas City Star picked out one of many sales tax exemptions that smack of special interest: Yachts.
One of the most glaring inequities in Missouri is the list of sales tax exemptions that pick certain types of sales “entitled” to a break.
Even if you could make a good case about why boats as a category should be exempt from charging sales tax, which seems doubtful, it seems ridiculous to choose only one type of boat: one that is generally considered a pleasure craft.
This is one of the biggest flaws in equity in Missouri’s current tax code. Over time, politicians have slipped exemptions in for certain types of businesses they believe are more deserving of a break than other businesses. Some exemptions we may believe are valid and worth continuing, but it is clear that we need a higher threshold, and a defense against the misuse of the tax exemption.
Part of the conversation surrounding SJR29 is necessarily about special interests. This plan would effectively reset the clock on decades of carve-outs, and put a check on politicians who would seek to reward or pick favorites through tax loopholes with the following language:
The enactment of any new exemptions will require a two-thirds affirmative vote by the General Assembly and approval by the Governor.
The KC Star article shows the wrongheadedness of thinking about tax exemptions:
Thanks to a longstanding tax exemption, Missouri’s marina set can opt to pay a small fee in lieu of sales taxes and shave as much as $30,000 off the purchase of a $500,000 boat.
That tax exemption alone is depriving state and local coffers of more than $6 million a year, according to some estimates. It’s just one of more than 130 untaxed transactions that are getting renewed attention in Jefferson City because of the state’s continuing budget crisis.
But if you’re buying a small bass boat or runabout, forget about any tax breaks. You’ll pay the full load.
Boat sellers contend the tax break is a good deal for the state. The additional revenue that taxing large boats would generate would be more than offset by sinking boat sales and lost jobs, said Mike Atkinson of the Lake of the Ozarks Marine Dealers Association.
Well, Mike Atkinson is right. That lovely get-out-of-sale tax-free card is certainly a boost to Missouri sales of large boats. Perhaps folks are coming from around the country to buy big boats in Missouri. But why do we think yachts are more important than any other type of boat, or any other type of business sale?
The SJR29 sales and use tax applies to any sale to a consumer of a good or service. It wants all businesses to get the same treatment. It wants to bring all kinds of businesses to Missouri by eliminating the state income tax. It eschews special interests for a holistic statewide interest.
