Realtors push state amendment that would bar sales tax on services

Services ranging from haircuts to tattoos would be exempt from future sales or use taxes under a proposed constitutional amendment that is expected to be on the November ballot in Missouri.

Missourians for Fair Taxation, a political-action committee created by the 20,000-member Missouri Realtors organization, is leading the effort to win voter approval of the measure.

Signatures have been submitted to the Missouri secretary of state's office for review.

Scott Charton, who operates a Columbia, Missouri, consulting company involved in the campaign, said organizers have more than enough signatures to get the issue on the ballot.

The proposed amendment would prohibit state and local governments from imposing new sales or use taxes on all services, ranging from professional and home services to personal and family services. It would cover everything from banking to medical care and landscaping to legal work, Charton said during a stop Wednesday in Cape Girardeau to promote the ballot measure.

Under the proposed amendment, the state and local governments could not impose a sales or use tax on any "service or activity" that was not subject to such a tax Jan. 1, 2015.

Charton said the amendment, which requires a simple majority for approval, would protect taxpayers from a "real and reoccurring threat."

New sales taxes on services have been proposed in the last seven legislative sessions in Missouri. While none has become law, Charton said taxpayers need a constitutional amendment to prevent such taxation in the future.

Lawmakers in Oklahoma and Illinois this year discussed the idea of creating new sales taxes on services.

"Other states have this year implemented new sales taxes on services, including North Carolina and Washington state," Charton said.

He said that is particularly concerning because "we know politicians share bad ideas."

He added, "We are not going to wait for politicians to take action on this thing."

He predicted voters will support the proposed amendment to protect taxpayers.

Dawn Seabaugh, association executive with the Cape Girardeau County Board of Realtors, said her group of nearly 300 Realtors supports the proposed amendment. She said area real-estate agents started discussing the issue last year.

In Missouri, sales and use taxes are levied on tangible goods. Charton said "services are not currently taxed, and the amendment would keep it that way."

But the definition of what constitutes a taxable service has changed over the years. Sales taxes now are levied on fitness centers, for example.

The Missouri Supreme Court ruled in a 2008 case that fees paid to a St. Louis area fitness center could be taxed because it was a place of "amusement, entertainment or recreation."

Christy Fernow owns Therapy Solutions in Perryville, Missouri. The business is a fitness center and also provides physical therapy services. Fernow said the fitness memberships are taxed, but physical-therapy services are not.

Fernow said both are services, and neither should be taxed.

Seabaugh said the fitness center opened in 2008. Several years later, the Missouri Department of Revenue audited her business and told her she owed for sales taxes.

"We had to pay back $20,000," Fernow said, adding she now charges sales tax on all fitness memberships.

Fernow said she likes the idea of the constitutional amendment but wishes it could apply to her situation.

In 2014, some Republican state lawmakers and business groups said the Missouri Department of Revenue had gone too far in collecting sales taxes from fitness centers.

Charton said taxation on fitness services underscores the need for the proposed constitutional amendment to protect myriad services that might otherwise face a similar fate.

mbliss@semissourian.com

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