Use Tax to be on April Ballot

Posted 11/7/19

By Chris OrletRecord Managing EditorWarrenton voters will get a chance to vote on a use tax in next year’s municipal election.The Warrenton Board of Aldermen on Oct. 15 voted unanimously to put the …

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Use Tax to be on April Ballot


By Chris OrletRecord Managing EditorWarrenton voters will get a chance to vote on a use tax in next year’s municipal election.The Warrenton Board of Aldermen on Oct. 15 voted unanimously to put the issue on the April 2014 ballot.If approved, the local use tax will be levied on certain items purchased outside Missouri.Mayor Jerry Dyer said that Wright City and Truesdale are also looking to put the issue on the April ballot. “If the neighboring districts are trying to sell this I think we can cabbage on with them and it will be easier to sell if three cities are trying to sell it than one,” said Dyer.Currently Missouri taxes some out-of-state purchases. “Unless we have a use tax the taxes do not come back to us,” said Dyer. The mayor estimated the city of Warrenton lost $584 in tax revenue based on the reduction in total motor vehicle sales tax from the fiscal year ending June 2011 to the fiscal year ending June 2013.The use tax rate is the same as the city’s sales tax of 7.975 percent.The vehicle tax legislation is a response to a January 2012 state Supreme Court ruling. The court said Greene County could not charge a local sales tax on a man who bought a boat from a dealer in Maryland. The ruling drew a distinction between sales taxes, which are collected from in-state retailers, and use taxes, which are levied on products used in Missouri but bought either from an out-of-state retailer or from someone who does not run a business.The Supreme Court said Greene County could not tax the boat because it wasn’t covered by the local sales tax and county voters had not approved a local use tax.The ruling had broad implications because a little less than half of Missouri’s 114 counties and most of its municipalities had no voter-approved use tax.Gov. Jay Nixon enacted a law earlier this year that immediately reinstates local vehicle taxes for numerous cities and counties that have been unable to tax cars, trucks and boats since a state Supreme Court ruling more than a year ago.Nixon twice vetoed previous bills that sought to reimpose the local vehicle taxes. His office said in a brief written statement that the previous bills “did not sufficiently protect Missourians’ right to vote on tax policy” but that the most recent version “addresses these concerns by requiring a public vote in local jurisdictions without a local use tax.”Some Illinois vehicle dealers in the St. Louis area had targeted Missouri consumers with the prospect of a tax break. Retailers in some other Missouri border cities also had seen more customers go elsewhere.“We were the only state where there was an advantage for the citizens of the state to not make purchases in the state,” said Sam Barbee, president and CEO of the Missouri Automobile Dealers Association.Cities and counties also had backed the legislation, because they had been losing tax revenues.The new law seeks to sidestep questions about the location and manner in which a vehicle is bought by redefining vehicle sales taxes to apply to the act of titling vehicles. The newly defined tax kicks in immediately. Within the next two years, local governments that did not previously have a voter-approved use tax must give voters a chance to repeal the titling sales tax for vehicles bought out of state or from individuals.Warren County residents voted earlier this year to approve a use tax. The measure passed with 55 percent voter approval.Missouri’s use tax, however, does not include Internet sales.Dyer said his big concern is if the state passes an Internet use tax. “If Missouri is working to implement a use tax on Internet sales we will need a use tax to participate in that,” he said.Currently Missouri can only require retailers to collect sales taxes if the retailer has a physical presence in the state. If an out-of-state seller does not collect use tax from the purchaser, the purchaser is responsible for remitting the use tax to Missouri.Alderman John Cornell said he has heard the use tax described as a “fairness tax” that levels the playing field for local brick-and-mortar businesses that are at a disadvantage because they have to charge a sales tax, while an Internet seller does not. “It’s good for the community and it’s good for local businesses,” Cornell added.A report published last year by the University of Missouri Truman School of Public Affairs’ Institute of Public Policy said Missouri missed out on $468 million annually in sales tax revenue during the past decade.In contrast to Missouri, 24 states have joined the Streamlined Sales Tax Agreement which encourages companies that sell over the Internet to collect taxes on sales made to member states. The retailers participate voluntarily. Still, member states collected an average of $30.7 million in tax revenue from 2005-2010, according to the Truman State report.The Associated Press Contributed to this story.Use Tax to be on April Ballot