Location Apparently Not A Competitive Advantage

Rent-seeking local auto and marine dealers have found friends in the Republican-dominated Missouri state legislature:

Gov. Jay Nixon says voters should have the final say on a bill placing local sales taxes on all motor vehicles purchased out of state.

In a statement released this morning, Nixon said the bill passed by the Legislature in the wee hours of this morning would “improperly impose a tax increase.

“My administration remains committed to working with the Legislature and others to resolve these issues, but the people of Missouri must have the opportunity to make their voices heard,” the governor said.

At issue is a bill that was rushed through yesterday in response to a ruling handed down by the Missouri Supreme Court in January.

Auto dealers say the court ruling puts them at a competitive disadvantage and is already driving sales to neighboring states.

While this might be a problem in border areas, not every citizen has the ability nor the wherewithal to buy a vehicle or boat in Maryland, no matter how convenient the Internet might make it. The economics term is place utility. That is, the place of the product matters. Local car dealerships have a competitive advantage over out-of-state dealers already because local car dealers are local.

The logic of a Republican legislator is truly dizzying:

Sen. Mike Kehoe, a former car dealer from Jefferson City, said today that the issue needs to be resolved quickly.

At the same time, Kehoe said the Legislature is considering offering some middle ground on the issue. At least one pending bill has been amended to give cities and counties the option to ask local voters if they want to continue the sales tax on out-of-state purchases.

“Maybe it could be a two-step process,” with the Legislature imposing the tax and voters deciding whether to keep it, Kehoe said.

Some counties already have a use tax in place; however, this Republican, theoretically representing a smaller government party, would prefer that the higher level of government impose its new tax upon the population and give county governments the ability to opt-out of the extra revenue whose taxation decision was taken out of their hands and their accountability.

Perhaps the proper way, and the way in more accordance with small government tradition, would be the other way around. You know, like it is currently.

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