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Hundreds of Missouri governments opt out of state's sales tax holiday

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Joe Mueller

(The Center Square) – Missouri consumers can get some economic relief during this weekend’s annual back-to-school sales tax holiday, but it's reduced by hundreds of cities, counties and special taxing districts not participating.

Almost half of Missouri’s counties – 49 out of 114 – passed legislation to opt out of the holiday, along with 156 cities and 92 special taxing districts. Consumers won’t pay Missouri’s 4.225 percent sales tax this weekend when purchasing school supplies, computers, and clothing. Shoppers should review the Missouri Department of Revenue’s list of citiescounties and special tax districts not participating in the program, which began at 12:01 a.m. Friday.

Marco Guzman, a state policy analyst with the Institute on Taxation and Economic Policy, believes state tax holidays don’t effectively help those needing relief and are too limited.

“I think they’re just really ineffective,” Guzman said. “They are poorly targeted and unnecessarily cut state and local revenue. They leave consumers susceptible for potential exploitation by retailers that might water down their promotions or increase prices. I think there are better permanent policy options to help taxpayers deal with inflation or the growing cost of energy.”

The first sales tax holiday was introduced in 1980 in Ohio. Missouri is one of 20 states to enact legislation for a sales tax holiday. Senate Bill 11, signed into law in 2003, established Missouri’s first sales tax holiday weekend in 2005.

Schools often publish supply lists before this weekend to help families desiring to take advantage of the break on sales tax. Tim Brinker, commissioner of Franklin County, said the weekend provides brief relief at the checkout counter.

“It comes before the major expenses of the school year ahead,” Brinker said. “There are families out there with three and four kids in school and this is a nice bonus for them. A little help goes a long way.”

The Franklin County sales tax is 2.25 percent. Washington, the largest city in Franklin County, charges a combined total sales tax of 9.6 percent. In addition to the state and county tax, Washington’s sales tax is 2 percent and it charges a special tax of 1.13 percent.

Only the Sullivan Fire Protection District, the New Haven Ambulance District, a taxing district in Union and the cities of Gerald and New Haven in Franklin County opted out of the program.

“It’s a good gesture for consumers regardless of class or socioeconomic status,” Brinker said. “It’s intended to help people save so they can meet the needs of their families at a lesser cost, at least for a brief period. We encourage that. It’s the least our government can do for our taxpayers.”

Guzman’s research estimates sales tax holidays will cost states and local governments more than $1 billion in lost revenue in 2022, up from an estimated $550 million last year.

“It creates a lot of administrative complexity – a lot of red tape for vendors and retailers, especially the small ones,” Guzman said. “Sales tax holidays just are not an effective solution when you could deal with the regressiveness of sales taxes. You also could provide meaningful tax relief to low-income people who need it the most.”