On the Trail: As sales taxes go up, so does likelihood of voters’ breaking point
In a region as fragmented as St. Louis, there’s one commonality uniting scores of towns and cities: high sales taxes.
Sales taxes are anywhere between around 6 percent and roughly 10.6 percent depending on where someone shops in St. Louis, St. Louis County, Jefferson County or the Metro East. And with voters approving half-cent increase in St. Louis and St. Louis County, consumers will be staring down a more than 11 percent sales tax in certain popular entertainment and shopping districts.
But there comes a breaking point at the intersection of voters’ interests and their pocketbooks, which played out in Illinois’ St. Clair and Madison counties last week. Plus, high taxes may drive people to shop elsewhere, which would hurt retailers and government coffers.
There’s no way to be sure if there’s a point where voters will stop supporting sales tax increases, according to Washington University business professor Glenn MacDonald. But a metro area can get into something of a vicious cycle when population drops and a tax base erodes.
“In order to keep the same level of services, you have to find more ways to generate revenue,” MacDonald said. “So, when you’ve got a specific tax for something like MetroLink or something like that, people will sometimes put up with that. But if all is happening is raising taxes into maintaining the same levels of services, that’s when they start getting less interested in supporting those proposals.”
That appeared to be the case in Illinois, where two separate one-cent sales tax increases — one for schools and one for policing — failed in St. Clair County and a one-cent school funding hike was voted down in Madison County.
“We’ve got this great distrust in government,” said Allen Scharf, a former superintendent for Millstadt’s school district. “I’m a local guy. And I had my own son-in-law call me on the morning and say, ‘Are they really going to use this to reduce our property taxes or is it just a shell game to get more money?’ So people have this distrust. That’s a problem.”
But other voters aren’t necessarily fed up with high sales taxes, considering St. Louis County residents backed two countywide increases: Moline Acres voters approved two local ones and Kirkwood residents agreed to continue the city’s half-cent sales tax.
That’s pushing the sales tax to places like Richmond Heights shopping centers and boutiques on Washington Avenue in St. Louis, due to additional, in-place sales taxes aimed at maintaining roads inside a retail development or making a retail thoroughfare on a city street look more attractive.
“I don’t believe that the sales tax is an issue that’s going to stop somebody from going and shopping some place,” former Brentwood mayor and Municipal League of Metro St. Louis executive director Pat Kelly said. “That argument has been used for years — and sales taxes have continued to increase marginally. And the places that usually have a higher sales tax are places where they’ve had new developments — and those all seem to be relatively successful. So people are going there to shop.”
St. Louis Mayor-elect LydaKrewson has acknowledged that elected officials “all know that the sales tax is edging up to the sort of upper limits, if you will, of the range.” She added that as long “as it’s not too far out of whack … most people don’t make their decisions” on what to buy “based on a quarter or half-cent sales tax.”
And it’s not out of the question that St. Louis residents could encounter more sales tax proposals in the near future. Lawmakers are mulling over whether to allow St. Louis, St. Louis County, St. Charles County, Jefferson County and Franklin County to impose a sales tax increase to help the St. Louis Zoo. And Krewsonindicated in February that some tax increases might be in the cards eventually to help the city police department, as the half-cent sales tax hike approved last week can’t be used for officer salaries.
On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.
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