Update 12/21/2021:

The Warrenton Board of Aldermen announced this week that they have canceled plans for the community forum discussing an online sales tax, and that they do not plan to put a tax on the election ballot this spring. The forum had been planned for Jan. 11. A city representative told The Record that aldermen had communicated since their last meeting and decided that they are not currently in favor of putting a tax on the ballot.

Original story:

The city of Warrenton is the latest local town to consider whether to expand its sales tax to online purchases, and it will hold a community forum to decide whether to place such a proposal up for election.

This type of tax is technically called a “use tax” under state law, but it’s essentially similar to a sales tax that applies to any product purchased online from out of state and then shipped to Missouri. A state law passed this year allows local governments to tax online sales beginning in 2023, but only if local voters approve creation of a use tax.

If proposed and approved, Warrenton’s 2.75% tax rate would eventually apply to online purchases. The funding could go toward general city services or to a specific purpose designated on the ballot.

A public forum will be held on Jan. 11 at 5:30 p.m. at the city’s Walton Street Annex Building, located behind Warrenton City Hall. City leaders are asking residents to attend and share their thoughts or concerns about the idea of an online sales tax.

Other than providing more funding for public services, proponents of online sales tax suggest that it creates competitive fairness for local business owners with brick-and-mortar stores. The argument is that online retailers are often able to offer better prices because they don’t have to charge the sales tax that locally owned stores are obligated to collect. In short, the tax system creates an incentive to shop online, rather than supporting hometown businesses.

Mayor Eric Schleuter commented during a November public meeting that an online tax could have both significant benefits and significant downsides.

“I’m split on it. We tax a lot. But I understand why some cities do it. It’s a lot of revenue, and it’s a lot of (sales) their local businesses are losing,” said Mayor Eric Schleuter.

City Attorney Christopher Graville, who would be part of drafting any proposal for an online tax, commented that the only way to truly say the tax is about fairness is if local businesses are in support of it.

“But as your brick and mortar declines, if you don’t level the playing field ... you’ll see that decline accelerated,” Graville said. He added that it would be hard to estimate how much revenue the city would generate or what could be accomplished with an online tax.

“It’s hard to project how much lost revenue this would make up for. It’s hard to say ‘if we do this (tax), then we’re going to do this project,’” Graville said.

Warrenton has until the last week of January to decide if it wants to place an online use tax onto the April election ballot. City aldermen said they want to get as much feedback as they can from residents and businesses ahead of that time.

Regardless of what Warrenton decides, all Warren County residents are going to start paying at least 6.225% in online sales taxes beginning in 2023. This is because the state and county governments both have existing use taxes, and do not need voter approval to apply those taxes to online sales.

Missouri’s sales/use tax rate is 4.225%, and the county’s sales/use tax rate is 2%, according to data published by the Missouri Department of Revenue.