Two Thumbs Down on the So-Called ‘Arch Tax’

Voters in Saint Louis City and County will go to the polls on Tuesday, April 2 to decide the fate of the so-called “Arch Tax.” In fact, more than 70 percent of the proceeds from the proposed tax (amounting to 3/16th of 1 percent on every $1 of sales of goods sold in the city and county) would be used to fund projects that have nothing to do with the Gateway Arch. There are several reasons why voters should reject this ill-conceived tax, but the most important reason is what the proposal does not do.

What the proposal did not do under the authorizing legislation in Jefferson City is exempt the new sales tax dollars from Tax Increment Financing (TIF). Because they did not exempt the Arch tax from TIF, a large portion of the revenues are likely to be diverted to the 176 (at least) TIF districts around Saint Louis City and County.

You may think you are voting to support the Arch and parks. However, a significant sum of the new sales taxes people pay will go to the many ludicrous subsidies implemented under TIF in recent decades. Many of the retail shopping districts in our area will now be able to keep half of the new Arch tax for themselves. You read that right. Existing TIFs will be able to “capture” half of the new Arch taxes generated within the TIF district and use it for private purposes. In other words, much of the revenue may not go to the parks . . . or the Arch . . . but to developers, municipal investors, and private retailers.

It was not a simple oversight allowing TIFs to capture the Arch sales taxes. Just a few years ago, the legislation authorizing a sales tax increase for MetroLink specifically exempted the tax from TIF. What is worse, in the very same legislation that authorized the new Arch tax (2012 HB 1504), the Missouri Legislature also authorized a new parks sales tax in Jackson County (Kansas City). Would you believe that they exempted the new Jackson County sales tax from TIF capture, but allowed the Arch tax to be taken by private developers within any TIF in the area? No, it was not an oversight. It was a choice, and voters deserve to know about that choice.

The second objection — as a quite separate matter — is another question that must be raised: Why are city and county residents being asked to support a federal monument — the Gateway Arch — with local tax revenue?

We do not hear of the residents of cities and towns in Wyoming, Montana, or Idaho being asked to support Yellowstone National Park with local sales taxes. Why should Saint Louis residents be asked to provide such support for the Arch?

Officials at the National Park Service have acknowledged that they do not know of any similar situation in which a local tax has been used to improve a national park or monument.

All in all, the Arch tax is a terrible idea on several counts. It deserves a resounding “no.”

Andrew B. Wilson is a resident fellow and senior writer and James A. Bosnick III is a policy extern at the Show-Me Institute, which promotes market solutions for Missouri public policy.