Plato has been credited with a lot over the centuries, but this might be the first time he’s been cited for a concise breakdown of a proposed amendment to Missouri’s Constitution.
In his dialogue “The Phaedrus,” Plato wrote: “Things are not always what they seem; the first appearance deceives many.” Written almost 1,700 years ago, its point is certainly the case with Amendment 4, which is on the November ballot.
Here is the Fair Ballot Language for the amendment, taken from the Secretary of State’s website (sos.mo.gov): “A ‘yes’ vote will amend the Missouri Constitution to prohibit a new state or local sales/use or other similar tax on any service or transaction. This amendment only applies to any service or transaction that was not subject to a sales/use or similar tax as of January 1, 2015.
“A ‘no’ vote will not amend the Missouri Constitution to prohibit such state or local sales/use or other similar tax. If passed, this measure will not increase or decrease taxes.”
Proponents argue that Amendment 4 must be passed in order to protect businesses and residents from the invocation of sales taxes on services such as haircuts, doctor visits, lawn care and real estate sales. Missourians for Fair Taxation, the coalition that is leading the charge for passage, contends on its website: “New sales taxes on services have been proposed in the last seven sessions of the Missouri General Assembly. Just this year, Missouri’s neighboring states of Oklahoma and Illinois have discussed taxing services. … The threat is real because politicians often share bad ideas, and a sales tax on services is a bad idea for Missouri consumers.”
While I agree with the belief that taxes on services is a bad idea, the generalized language and overreach of this amendment also are a bad ideas The Missouri Municipal League has come out against the amendment for these reasons and others. In its rationale for opposing Amendment 4, the league states: “There are no current efforts in Missouri to tax services. Placing a broad constitutional prohibition on the ballot to prevent an action that has not yet or may never occur is bad public policy.”
Missourians for Fair Taxation is not wrong when it points out that sales taxes on services have been discussed during past legislative sessions. But it is important to note that the state’s constitution demands that any proposal to initiate local sales taxes on services would require a public vote. While not expected, voters in certain municipalities might be in favor of adding a service-based tax to create revenue for a program or project. This amendment would inhibit the will of the people.
The amendment also prohibits sales or use taxes on “any service or transaction that was not subject to a sales/use or similar tax as of January 1, 2015.” We live in a rapidly changing world with new products and services being created daily; Amendment 4 would “freeze the clock” and cut off potential future revenue streams before anyone even knows their promise. It doesn’t mean that taxes will be invoked, but it would mean that municipalities couldn’t even consider them.
Backers and critics also are torn over use of the word “transaction” in the amendment language, with backers contending its meaning is clear and critics saying it is nebulous and could lead to court interpretations that could limit or roll back revenue opportunities for taxing districts. It would seem that by definition, the purchase of gasoline or alcohol or a pair of earbuds would be considered a transaction, so the amendment could bar creation of sales taxes on goods that currently are not taxed. Again, this ignores the evolution of our economy and unforeseen future needs.
Amendment 4 backers’ quest to prohibit taxes on services is worthy. However, this measure is too far-reaching and should not be added to Missouri’s Constitution. If a tax on a service appears on a ballot, the voters within the taxing district should be allowed to have their say on the issue.
Bob Satnan is the communications director for Sedalia School District 200.