With Missouri’s next legislative session set to begin in a few weeks, it’s time to start discussing some of the policies that may be up for consideration.
One such topic is the internet sales tax. Ever since the Supreme Court handed down its Wayfair decision, states across the country have been adjusting their laws to allow for the collection of internet sales taxes from businesses that don’t have a physical presence in the state. The issue has gained some traction in Missouri over the past few years, but the legislature has yet to act.
Before using the internet sales tax as a new stream of revenue, here are a few things policymakers should consider:
- Revenue Neutral – Raising taxes on Missourians during a once-in-a-generation pandemic should be a non-starter. To ensure the overall tax burden of Missourians stays the same, the internet sales tax should have a mechanism to make it revenue neutral in perpetuity. To balance the increased sales tax, the legislature should agree to lower another tax (corporate, income, sales, etc.) at a rate corresponding to the projections for internet sales tax collections.
- Accountable – If the legislature wants another source of revenue, it should include measures that ensure the funds are collected accountably. Instead of simply adding to the billions collected each year in sales and use taxes, these new funds should be tracked separately. Doing so would allow Missourians the opportunity to track how much money is being raised as a result of the legislation, and also help ensure the move remains revenue neutral by seeing how other taxes will be adjusted each year accordingly.
- Transparent – In such trying economic times, it is more important than ever that taxpayers know where their tax dollars are being spent. Any government that wants to begin collecting a new tax should be required to regularly publish its transaction data. My colleagues have been writing about the need for checkbook transparency for years, and any effort to raise taxes should include this policy as a precondition.
In the coming months, discussions about Wayfair will likely begin again, and supporters of small, responsible government need to pay attention. Collecting an internet sales tax can be done in a responsible way, but under no circumstances should the budgetary problems of today be used to justify raising taxes on Missourians for years to come.
