Truesdale city leaders briefly discussed the idea of a use tax in December, before quickly rejecting the suggestion.
A use tax is essentially similar to a sales tax that is applied only to …
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Truesdale city leaders briefly discussed the idea of a use tax in December, before quickly rejecting the suggestion.
A use tax is essentially similar to a sales tax that is applied only to personal property purchases from outside of Missouri. City leaders discussed on Dec. 9 whether they should place such a tax on election ballots in April.
But city leaders said it’s too soon after the city passed a transportation sales tax earlier this year, and that residents are going through financial difficulty right now.
“As much as I hate to bring it up for the next municipal election (in 2022), I don’t think it’s a good idea to bring it up for this one,” said Mike Thomas, commenting about the next election where he’ll be on the ballot in 2022. “We just went to the voters (for a tax). I don’t think it’s a good idea.”
The conversation of a use tax started last year at the suggestion of the Missouri Municipal League, a professional association for municipal governments, said Truesdale City Administrator MaryLou Rainwater.
Rainwater said the objective of a use tax would be to put local businesses on an even playing field with those who are shipping purchases to Truesdale from out of state.
“You either pay a use tax or a sales tax. You never pay both,” Rainwater explained. “But if I go to Napa and buy something here for $100, I pay sales tax. I can buy the same thing online out of state and not have to pay a tax. So (the current system) kind of penalizes our local businesses in the area.”
“Missouri Municipal League estimated in 2018, we would have brought in $15,000,” with a use tax, Rainwater added.
The use tax topic may come up again in the future, but for now has been set aside, Rainwater said.
A new sales tax approved by Truesdale voters in June went into effect this October, and new revenue has begun arriving at Truesdale City Hall.
The half-cent sales tax is solely dedicated to transportation improvements in the city. Rainwater said the city has thus far received $6,591.
“That’s less than what we anticipated. I believe it’s because some of the businesses aren’t aware that the tax rate increased,” Rainwater said.
Sales taxes are collected through the Missouri state Department of Revenue, and then distributed appropriately to individual governments. Rainwater said the Department of Revenue has ended a practice of notifying businesses when their sales tax collections need to change. That will likely mean some businesses need to catch up the next time they audit their sales tax contributions.
By the end of Truesdale’s fiscal year in July, Rainwater estimates the transportation sales tax will generate about $40,000. She said any major spending from that funding would likely wait until the city’s next budget cycle.
“(The board) may do a small project early in the spring, such as road repair or patchwork. We have a couple areas, where there’s heavy trucks, that the road has kind of gave way. ... But a large project would probably not be done until after the summer of 2021,” Rainwater said.
