Missouri’s house of representatives has overwhelmingly passed a law that would waive the state’s 4.225% sales tax on vehicles built there in what The Associated Press (AP) called a unique twist on the economic incentive plans other vehicle-producing states offer.
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That would mean Missourians buy a new Dodge Caravan minivan and pay no state sales tax but the tax still applies if they choose a Honda, Toyota or other rival minivan. A Ford F-150 pickup truck or a GMC Savannah van would be tax-free.
According to AP, supporters hope the waiver would get residents to buy more vehicles made in their state, which could spur more automakers to manufacture more models, build new factories there and preserve high-paying, high-benefit factory jobs.
Missouri apparently would be the first state in the nation to offer a consumer tax break for vehicles made in its state, according to the National Conference of State Legislatures, the report noted.
Chrysler, Ford, General Motors and Harley Davidson make vehicles in six plants in Missouri, but none make cars – only pickup trucks, SUVs, vans and motorcycles. In fact, only a handful of the vehicles that the proposal would exempt from the state sales tax get more than 25 miles per gallon, The Associated Press noted.
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By GlobalDataWhile consumers would save about US$1,350 on their F-150s listed at about $32,000, a Ford spokeswoman told the news agency she didn’t know how strong an incentive the sales tax waiver would be for Ford to build more of its vehicles in Missouri.
“We view this more as something that would be beneficial to consumers,” Anne Marie Gattari told AP.
The report said bill is sponsored by a Democrat politician but has bipartisan support, including the two top-ranking members in the house of representatives. It passed there by 152-1 and now moves on to the senate.
Representative Michael Spreng, whose district could lose more than 1,300 jobs due to Ford’s plans to close the St. Louis Assembly Plant in Hazelwood, told The Associated Press it would be foolish not to try something.
According to the Department of Economic Development, the Hazelwood plant contributed more than 6,700 jobs and $23.2 million in tax revenue to the state, the news agency said, adding that, overall, Missouri’s six vehicle plants employ 16,000 workers, create an additional 54,000 jobs, pay $236 million in state taxes and account for almost 3% of the state economy.
Representaive Ed Robb, a former economics professor at the University of Missouri-Columbia, reportedly was the only house member to oppose the tax break and said it would take more than knocking $1,000 off the sticker price to keep the manufacturing jobs.
The waiver is expected to cost at least $3.6 million in its first year, and Robb told The Associated Press little of that would be recouped because the additional vehicle purchases prompted by the tax waiver wouldn’t leave a big enough footprint on the manufacturer’s bottom line.
“This is not going to cause any motor vehicle manufacturer to stay in Missouri,” he told AP. “It just doesn’t have a possibility of making a difference.”
