JEFFERSON CITY, Mo. — As Missouri moves to reopen the state’s economy while still respecting social distancing measures related to the COVID-19 pandemic, city and county government leaders warn of dire financial problems due to Missouri’s lack of an e-commerce use tax.

“The failure of the Missouri legislature to pass an e-commerce use tax has the potential to bankrupt local governments across the state because of the COVID-19 shutdown,” said Callaway County Presiding Commissioner Gary Jungermann. “The large online retailers that don’t collect and remit use taxes on the vast majority of their sales now represent the lion’s share of economic activity in the state and are starving municipalities and counties of crucial revenue.”

In response to a decision from the United States Supreme Court in the case of South Dakota vs. Wayfair, 43 of 45 states with statewide sales/use taxes have updated their laws to allow the collection of online sales/use taxes by anyone that has an economic nexus in the state. Missouri and Florida are the only two states that still rely on the older physical presence standard.

By failing to update its use tax laws, approximately 90 percent of the items sold on websites like Walmart and Etsy are tax free, because they are sold and shipped by a third party that does not have a physical presence in Missouri. With nearly all local retail outlets shut down during stay-at-home orders, and no requirement on e-commerce retailers to remit use taxes from the massive shift to online shopping, local governments are left grappling to provide even the most critical services citizens depend upon.

“Now more than ever, we need the Missouri General Assembly to close the online use tax loophole and level the playing field for our shopkeepers who are struggling right now,” said Columbia Mayor, Brian Treece. “The current pandemic has altered consumer spending while dramatically increasing the demands of local government.”