Tax Refund: Failure to Launch
The results are in, and the first year of Missouri’s gas tax refund program couldn’t have gone much worse.
Recently, the Missouri Department of Revenue released data showing that in the refund program’s first year, fewer than 17,000 Missouri taxpayers decided to claim a refund. This amounted to less than $500,000 being returned to taxpayers.
Back when the gas tax hike was being debated, I repeatedly sounded the alarm about a few of the bill’s provisions (read more about the concerns here). The gist of the bill was that the state’s gas tax would increase by 2.5 cents per year for five years, but Missourians could get a refund for the amount of the new tax they paid.
Typically, Missouri’s constitution requires tax increases to receive voter approval before they can be enacted. But this refund provision helped convince lawmakers that their legislation wasn’t necessarily a “tax increase” on Missourians, thus giving them the ability to sidestep this pesky provision. According to the bill’s fiscal note, even the department of revenue’s “low-refund” estimate suggested that at least 15% of all gallons purchased would receive refund claims. If this were true, this first year of refunds would have totaled more than $11 million. Instead, only about 4% of the low estimate was claimed.
At the time, I remarked how skeptical I was that many Missourians would claim these refunds. I thought that unless the department of revenue made it easier for taxpayers to file claims, the amount of money eligible for refund would likely be too small to convince Missourians to bother. The process is tedious and cumbersome—in order to file for a refund, you must keep all the gas receipts that you are seeking reimbursement for, fill out a spreadsheet with information on those receipts, and the request must be completed in a narrow time window after the fiscal year ends. While the current sample size for refund claims is small, the ridiculously low amount of dollars returned leads me to believe that this prediction turned out to be correct.
To be fair, this is only the first year of the multi-year effort, and as the gas tax continues to rise over the next few years, the value of the refund to taxpayers will increase. But it’s also fair to say the participation in year one should be worrying to anyone who believed the bill was not an effort to significantly raise taxes on Missourians without their input.