It may surprise you to know that cities in Missouri depend more on sales taxes and less on property taxes than almost any other state. I think there should be more balance in that equation. From the Institute’s paper on Missouri’s 20 largest cities:
Relying heavily on sales and use taxes may not be the best way to ensure reliable, stable revenue streams. Property taxes tend to provide a more stable revenue stream.
The City of Ashland in Boone County has a sales tax proposal on the April ballot. Typically, new sales tax proposals tend to be something like a quarter-cent for parks or a half-cent for transportation. But the Ashland sales tax proposal is for an additional one percent general sales tax on top of the existing one percent general sales tax. Ashland is proposing to use the new revenues for roads and police. This new tax, if approved by voters, would put the new Ashland sales tax rate at 3.5 %, which, as far as I can tell, would be the highest municipal sales tax rate in Missouri. It would be higher than Joplin’s sales tax rate, which at 3.125% is the highest rate for any large Missouri city. (We need to leave the City of St. Louis out of this because it is an independent city so there are no county sales taxes to consider.)
Ashland’s own promotional materials for the sales tax (which are clearly not just informational but actively promoting it) directly state:
Data show that an estimated 60 to 70% of sales tax revenue generated within the City of Ashland is paid by those that do not reside in Ashland. This sales tax increase will have the largest impact on those that do not live in Ashland. (emphasis added)
This continues the trend of many cities thinking they are smart by taxing “the other person,” even though plenty of other cities and counties are trying to do the same thing. You think your residents are getting a good deal by taxing those outsiders, but your residents are getting jobbed in the same way by the other cities and counties around them. This practice is at its most extreme with traffic ticket revenues. (The adoption of use taxes is the opposite of this—use taxes imposes sales taxes on residents of the community.)
Ashland has a relatively low property tax rate, which will be decreased further if the sales tax passes. This just further increases Ashland’s reliance on taxing shoppers and outsiders instead of people directly paying for the municipal services they use. Residents make smarter decisions about what municipal services they want when they are the ones paying for them, not when they can outsource the cost of running their municipality to non-voters. This is true with the earnings tax in St. Louis and Kansas City, and it is true with outlandishly high sales taxes in Joplin, Hazelwood, and Ashland.
I recognize that people in Ashland are not trapped. Residents and visitors may choose to shop in Columbia or Jefferson City if local sales taxes are too high. But that doesn’t mean it is good public policy to increase the sales tax rate as much as you can. The purpose of government is not to maximize revenue just for the sake of it.
I don’t claim to know for certain what “too high” is for sales taxes, but watching Ashland try to pass another general sales tax on top of the state, county, and local sales taxes the residents already pay makes me think that Ashland is almost certainly above it. Sales taxes have an important role in funding state and local governments, but Ashland city officials are taking things too far with their latest proposal.