Legitimizing Tax Stacking a Bad Move

Municipalities that employ tax stacking — levying multiple sales taxes above the state cap of 1.5 percent — may soon receive state protection. Missouri House Bill 1442 will protect municipalities, like St. Joseph and Joplin, that have already approved taxes higher than the state limit. The bill would allow them to keep any taxes already approved and would protect those cities from having to refund the relevant revenues.

Stacked taxes have been discussed at length previously here at Show-Me Daily. I agree that refunding the money that has already been acquired could be a counterproductive task. It would be difficult to redistribute previously collected sales taxes unless the affected municipalities lower sales tax rates for a specific amount of time. (Lowering the tax rate could also potentially bring in more revenue, if people take advantage of the lower rate through increased consumption. After all, raising taxes does not always increase revenue.)

At any rate, municipalities should not be allowed to keep the stacked taxes in place. The state capped municipal sales taxes at 1.5 percent for a reason: to prevent cities from raising taxes beyond a specified point. Municipalities need to find a way to use their funds more efficiently. Allowing them to keep the extra taxes without any sort of penalty sets a bad precedent for future behavior. Protecting the practice of tax stacking now only ensures that it will continue to happen in the future.