Missouri Losing as Much as $600 Million in Sales Tax Revenue

ST. LOUIS October 16, 2019 - According to a report released today by the Faith

Justice and Truth Project, Missouri is losing $575 million to over $600 million a year in

sales taxes because of untaxed e-commerce sales that otherwise would have been taxable

if purchased in a store with a physical presence in the state. If the growth of e-commerce

sales continues at a similar pace, then Missouri e-commerce sales tax losses could soon

easily exceed $800 million.

Missouri enacted an e-commerce click-through nexus law in 2003, but it is one of the

only states in the country that has not enacted a more stringent law to collect more e-

commerce-oriented sales tax via the United States Supreme Court’s Wayfair decision.

Missouri could capture a significant portion of this lost revenue if it updates its

treatment of e-commerce and other remote seller sales.

A large portion of the Missouri’s sales tax erosion is the result changing consumer

behavior which has shifted spending habits to e-commerce sales that have gone

untaxed. In 2018, Missouri residents paid almost 20% less in sales tax as a percentage

of personal income in 2018 as compared to years in the last decade.

Civic leaders, including the St. Louis Chapter of the NAACP called for action in the 2020

legislative session to enact an online sales tax in Missouri.

“When shopping habits change and the most affluent consumers are able to purchase

products tax free over the internet, Missouri’s sales tax becomes increasingly regressive,

said Rev. Billy Honor, Executive Director of the Faith Justice and Truth Project. “Rural

consumers and communities of color that find themselves on the wrong side of the

digital divide end up paying the lion share of sales taxes and that’s not right.”

“This report makes it clear that an e-commerce sales tax is not a new tax. It is money

that used to be collected by the State of Missouri and continues to be due under the law.

Failing to collect it punishes small businesses,” said Adolphus Pruitt, President of the St.

Louis Chapter of the NAACP.

The report also finds that some of the largest retailers in Missouri are under collecting

sales taxes. Walmart, the Missouri’s largest retail collector of sales tax is estimated is

estimated to be under-collecting sales tax for in-store sales by as much as $63 million.

When combined with lost revenue from sales on Walmart.com the retailer may be

responsible up to $117 million in lost sales tax revenue annually.

“I can compete against Walmart on a fair playing field, but when Walmart offers in-store

and online products at an artificial discount because it isn’t paying its share of taxes, my

business is put at a huge disadvantage” said Steve Ripper, owner of Southside

Hardware.

Further attention to e-commerce and sales tax compliance issues are warranted if

Missouri leaders wish to recoup the same level of sales taxes relative to personal income

as they have in the past.

The full report is available online at: www.FaithJusticeTruth.org