Tax could send shoppers across state line

With a sales tax rate more than a percent lower than in Kansas, Missouri has long been an attractive alternative for local shoppers — especially considering the proximity of Joplin, Mo., to the Pittsburg area.

If Kansas Gov. Mark Parkinson’s sales tax increase proposal passes in the Legislature, the Show Me State may become even more appealing to shoppers on this side of the state line.

During his State of the State address Monday, Parkinson asked lawmakers to increase the state sales tax for three years to 6.3 percent from 5.3 percent. Missouri’s sales tax is 4.225 percent.

Local business leaders said Thursday that while they understand the tax hike may be needed to help fill the state’s $400 million budget gap, they also warned that the increase could have an adverse effect on Kansas businesses.

"We certainly understand the position that the state is in," said Blake Benson, president of the Pittsburg Area Chamber of Commerce. "Unfortunately, in border communities like ours, we are already losing some business to neighboring states that have a lower sales tax, and you risk the potential of losing even more with a tax increase.

“The perception is already out there that Missouri’s sales tax is significantly lower than ours,” Benson said, “and I think the danger is (a tax increase in Kansas) would be one more reason to go to another state.”

J. Todd Ewing, vice president and general manager of the Meadowbrook Shopping Complex, said while he doesn’t anticipate a tax increase having a major effect on “traffic” at the local mall, he does believe many local shoppers could find the lower rates in Missouri and Oklahoma too good to pass up if the Kansas tax jumps to 6.3 percent.

“The concern is that customers may consider the increase motivation enough to consider lower tax areas, like Missouri and Oklahoma,” Ewing said. “While it may not influence day-to-day traffic here, overall, it may make people that are more sensitive to that consider going elsewhere.”

Along with the sales tax increase, Parkinson also recommended raising the cigarette tax by 55 cents to $1.34 a pack and increasing the tax on other tobacco products to 40 percent from 10 percent. Paullette Castagno, manager at Pittsburg’s MiniMart convenience store, said the cigarette tax proposal has made “everybody a little bit nervous.”

“I think it will hurt business,” she said. “People are spending only what they can spend right now anyway, and it will be hard for them to come up with more money. It’s not real good.”

Castagno said she knows many local smokers already travel to Missouri to buy their cigarettes, and she believes a tax increase would worsen that problem for Kansas stores.

“People are already going across state lines,” she said. “Why wouldn’t they, especially if they have to buy other things? Times are hard and this is not going to help any. I think everybody is a little bit nervous.”

On the flip side of their concerns over how a tax increase could affect sales, business leaders said they understand an increase may be what it takes to put the state back on a solid financial footing.

“If it goes toward helping the state out of its situation and the funding is thrown in the direction of schools and areas that are in need right now,” Ewing said, “then I think it probably needs to happen. However, if the money continues to be wasted, I’m not sure anybody would be too happy about that.”

Mark Turnbull, Pittsburg’s director of economic development, said the business leaders with whom he’s spoken have said that a tax increase would not be a “good thing,” but added that the state “has to balance the budget somehow.”

Rep. Julie Menghini, D-Pittsburg, said that Kansans who choose to shop in Missouri should keep in mind that, by doing so, they are taking potential revenue out of Kansas’ budget.

“Folks are going to go where the best deal is,” she said, “and they don't realize that they are investing in Missouri roads and other Missouri infrastructure when they go across the border.”

Tax plan fails in committee

Menghini said Thursday afternoon that the governor’s tax increase proposal did not muster the necessary number of votes in the Senate Tax Committee to be introduced for discussion.

However, Menghini said her proposal for rolling back some sales tax exemptions for Kansas businesses was introduced in the House, although it failed in the Senate.

“We have been told that we will have hearing in the Tax Committee,” Menghini said.

Matthew Clark, the Morning Sun’s Community Conversation Editor, contributed to this report.