Missouri voters will vote on a ballot question that, if approved in November, would prohibit state lawmakers from imposing any taxes on services, such as lawn work, plumbing, construction, and health care.
The measure, titled Amendment 4, would amend the state’s constitution to prohibit any new sales or use taxes on transactions not involving goods.
Jared Walczak, a policy analyst at the Tax Foundation, says the ballot measure proposes a unique idea not seen in other states.
“Three states—Hawaii, New Mexico, and South Dakota—include most services in their sales tax base,” Walczak said. “Most states are far more selective, exempting many or most services.”
Pressure on Other Taxes
Walczak says passage of Amendment 4 would lead to other tax hikes.
“Amendment 4 would limit the imposition of the sales tax to an ever-shrinking share of transactions taking place in Missouri, which may force policymakers to consider raising the rate of the sales tax or some other tax, as the sales tax base continues to erode,” Walczak said.
Calls for Broad Tax Reform
Patrick Ishmael, director of government accountability at the Show-Me Institute, says lawmakers should make sales taxes apply to more transactions, not fewer.
“Income taxes are among the most destructive one can have for growth, and moving toward a sales tax would be an improvement in that vein,” Ishmael says. “A growth-oriented shift away from income taxes and toward sales taxes could materialize in either higher sales tax rates or fewer exceptions to what a sales tax is charged on—that is, a broadening of the sales tax base.”