Lawmakers want to ensure municipalities are receiving their proper sales tax allocations

• The Mississippi Senate unanimously passed a bill Thursday that creates a study group to evaluate sales tax diversions between the state and its cities and towns.

During Thursday’s Senate Floor debate, Mississippi Senators approved the creation of a Sales Tax Diversion Study Commission to explore, evaluate, and develop recommendations for the proper allocation of tax funds between the state and its municipalities.

State Senator David Parker (R), the author of SB 2582, said the goal is to “look at the problem and how to effectively get the money back to the cities.” He added that there are businesses across Mississippi that have slipped through the cracks and are not paying their share of taxes, resulting in cities not collecting the 18.5 percent due to them from the 7 percent sales tax.

If signed into law, the four-page bill would create a panel consisting of 11 members, including the Commissioner of Revenue, members of the Senate and House, the Executive Director of the Mississippi Municipal League, the State Director of the National Federation of Independent Business, and the Executive Director of the Mississippi Economic Council. The panel will also include a representative from a municipality with a population over 50,000 and a representative from a municipality with a population under 50,000. Both municipal members would be appointed by the Governor.

The Committee will receive data, analysis, and assistance from the state when requested as they go about a comprehensive review of current sales tax diversion practices and identifying discrepancies. The group would also look at the technology being used and evaluate accountability and oversight mechanisms to ensure accurate sales tax distributions are being made to the state’s cities and towns.

If created, the committee would be tasked with presenting its findings by the end of the year, ahead of the 2026 legislative session.

The legislation, which unanimously passed the Senate, now heads to the Mississippi House of Representatives for consideration.