Missouri becomes last in the nation to pass online sales tax for out-of-state retailers

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Missourians would begin paying tax on online sales from retailers such as Ebay and Etsy under a bill state lawmakers sent to Gov. Mike Parson’s desk on Friday.

Missouri would become the last state to collect the so-called Wayfair tax, which Parson and the Missouri Chamber of Commerce have promoted for as a way to even out competition between local brick-and-mortar businesses that already charge sales tax, and online out-of-state operations.

The House passed the legislation 145-6 after a boom for e-commerce during the COVID-19 pandemic.

By the end of the next eight years it could generate up to $46 million for schools, $5.8 million for conservation, $4.7 million for parks and $27 million for local governments.

The $130 million to $200 million raised in state revenue, however, would likely be more than offset as a result of income tax cuts for all but the lowest-earning Missourians that are also in the bill. Compromising with Democrats in the state Senate, the Republican sponsors added a state earned income tax credit, which is targeted to low- and moderate-income families.

“There are a lot of winners in this,” said Rep. J. Eggleston, a Maysville Republican who said he was otherwise not in favor of the earned income tax credit.

Rep. Steve Butz, a St. Louis Democrat, said it took the legislature too long to pass the “Wayfair” tax. The bill has been introduced annually since the Supreme Court ruled in 2018 that states can charge such a tax even if the online store doesn’t have any physical presence in the state.

Some retailers such as Amazon have already been charging the tax in Missouri, but “marketplace facilitators” for third-party sellers, like Ebay, would now have to charge the tax under the bill.

Both sides of the tax debate had to give to arrive at the final package, Butz said, but both also received something in return.

“Better late than never,” Butz said. “Both [sides] had to give, both had to get something.”

The bill also includes a provision to exempt federal stimulus checks from income tax.

The Star’s Jonathan Shorman contributed reporting.