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Missouri Mega Tax Initiative Petitions Could Cut State Revenue

  • Sep 13, 2011 | Susan McLain

In a recent statement, the Missouri Budget Project says, “Four new initiative petitions have been filed that would…greatly expand the sales tax and eliminate the personal income tax. If passed, the new tax structure would result in general revenue shortfalls of at least $2.5 billion—about 1/3 of the general revenue total.”

In the Quick Facts on the Petitions, it indicates that all the petitions would phase out the state personal income tax by 2016 and replace it with a higher, expanded sales tax. Currently, food is taxed at a lower level in Missouri. The most recent information from the state is that “…all types of food items that may be purchased with Food Stamps” are considered eligible for the 1.225% tax rate versus the higher 4.225% rate for other goods and services.  Food is proposed to be taxed at 5.5% if the initiatives pass.

Income tax would gradually drop and eventually be phased out entirely by 2016, however, corporate income taxes would continue to exist.

According to the Missouri Budget Project, it is their determination that the changes would cause stress for lower income families who would begin paying higher taxes on food. In addition to stressing lower income families on a basic level, the proposals would not generate enough revenue, causing a budget shortfall “…of at least $2.5 billion in general revenue.”

Their concerns stated in the Quick Facts document are that the proposals create “…a significant drop in the amount of funding available for education, infrastructure and other critical services,” and “…tax essential, basic products and services at a higher rate.” The proposals would cause Missouri to shift its base of revenue from the current system to one that “…relies predominantly on the consumption of individuals.”  The shift to “taxing food means that low and middle income Missourians will assume a disproportionate share of the costs of paying for the services that benefit all Missourians.”

Bottom line according the Missouri Budget Project: “If the mega tax generates much less revenue than the state currently collects, there is no mechanism to allow an adjustment.”

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”