Alert: Voting “Yes” On Missouri Constitutional Amendment #4 Means Voting "No" For Sales Tax On Professional Services Like Massage Therapy

A Lack of Clarity in the Ballot Presentation of Missouri Constitutional Amendment #4 Could Trick Massage Therapists in to Voting for Sales Tax on Massage Therapy Services.

Normally, The Healing Arts Center steers completely clear of politics, after all, both Republicans and Democrats love massage and we love them.   We will never discuss an opinion about a candidate (unless one directly threatens us) and we are clear that you have all had enough politics already.  But with the upcoming election close at hand, we needed to alert the massage therapy community to a tricky situation in the ballot presentation of Missouri Proposed Amendment #4. The proposed amendment actually prohibits state government from placing sales tax on professional services that are not currently subject to sales tax.  Currently, massage therapy is not subject to state sales tax.  This amendment would keep it that way.  Most of us probably want to vote "yes" on this prohibition.

When you see this on the ballot, however, you can easily get confused.   The ballot looks like this:

​Shall the Missouri Constitution be amended to prohibit a new state or local sales/use or other similar tax on any service or transaction that was not subject to a sales/use or similar tax as of January 1, 2015?
​
Potential costs to state and local governmental entities are unknown, but could be significant.  The proposal’s passage would impact governmental entity’s ability to revise their tax structures.  State and local governments expect no savings from this proposal.

Fair Ballot Language:
A “yes” vote will amend the Missouri Constitution to prohibit a new state or local sales/use or other similar tax on any service or transaction. This amendment only applies to any service or transaction that was not subject to a sales/use or similar tax as of January 1, 2015.

A “no” vote will not amend the Missouri Constitution to prohibit such state or local sales/use or other similar tax.

If passed, this measure will not increase or decrease taxes.

A “yes” vote enacts the ban on sales tax on services.  A “no” vote allows the state legislature to tax all services in addition to making service providers pay income tax on the earned service fees.   

Why HAC Recommends A "Yes" Vote On Amendment #4:

1. People who provide services to the community are already paying income tax on the money they make from the sale of their services.   The state is already getting their share.
2. Taxing the service provider's customer, makes services more expensive thereby driving down demand.   This directly hurts the earnings of professional service providers and, in turn, actually reduces income taxes at a higher rate than sales tax from being collected by the state.  It is self-defeating.
3. Sales tax on services is really a strategy sought out by municipalities to "get their share" of professional services income because they do not get a slice of income tax.   But municipalities are already charging service providers for business licenses and other local fees.  
4. A sales tax on professional service providers hurts our most vulnerable workers, many of whom are self-employed or employed by small businesses and can least afford the impact of an extra tax burden.
5. By placing sales tax on professional services, the state would be essentially creating double taxation on massage therapy.  Services are economically different than products.  Products are not subject to income tax and the loss of sales from the increased customer cost of sales tax does not have a similar harmful effect directly on the worker who produces the product. Sale tax impact on products are more easily managed and recovered by vendors with minimal impact on workers.  ​

HAC is not prepared to say that the way the proposal is presented on the ballot is intentionally tricky, but it most certainly can be misleading.  We advise voters to read all ballot initiatives very carefully in every case, but especially here.  In this case "yes" means "no" to sales tax on professional services.