Cape Girardeau may opt out of sales tax holiday

Sunday, May 17, 2009

Since 2005, Cape Girardeau has reluctantly participated in a statewide sales tax holiday designed to help parents save money on clothing, school supplies and computers.

Each year, the city council was briefed on the likely loss of revenue -- city finance director John Richbourg estimates it costs $26,000 to $50,000 each year for the three-day tax holiday. But if an ordinance on the council's agenda for its 7 p.m. Monday meeting is adopted, Cape Girardeau will not take part in the holiday for the first time since it was enacted in 2005.

Council members contacted Friday said they will likely vote to opt out of the holiday, although some expressed some reluctance to do so. But the city's budget needs are dire, they said. The city is trying to close a $661,000 gap in its budget of more than $40 million and every dollar is needed, they said.

"It is something that we can do for our citizens, but the budget is just too tight," said Loretta Schneider, Ward 4 councilwoman. "We know there is a certain amount of sales tax we will lose, and all of that is important to us."

Cape Girardeau collects a 2.75 percent sales tax, made up of a variety of taxes ranging from a general revenue sales tax to taxes dedicated to roads, parks and public safety. The total sales tax rate in Cape Girardeau is 7.975 percent, which includes the 4.225 percent for state programs and 1 percent for Cape Girardeau County.

Cape Girardeau County has always participated in the tax holiday. Presiding Commissioner Gerald Jones could not be reached for comment.

Jackson, which also has participated each year, will not change due to economic stress, Mayor Barbara Lohr said. "It is a big deal," she said. "And in this economy your sales tax dollars are a big thing, but we feel this is a small way we as a city can help those folks who need to purchase those items for students that need to get back to school."

Participating in the tax holiday while Cape Girardeau does not may not be a bad thing, Lohr added. "If it gets more people over here shopping, we are happy about that."

The tax holiday this year will be Aug. 7 to 9. Items that may be purchased tax-free include clothing costing $100 or less and school supplies totaling $50 or less in a single purchase. Computer software costing $350 or less as well as computers up to $3,500 and computer peripherals such as printers, also up to $3,500, are also exempt.

Even in local jurisdictions that do not participate, the state sales tax will not be collected.

Mark Lanzotti, councilman for Cape Girardeau's Ward 5, said he is torn between supporting the tax holiday and the city's need for revenue.

"I am a hate-tax kind of guy," Lanzotti said. "Part of me wants to take part. The other part is the budgetary issue -- we are in tight budgetary times."

The back-to-school tax holiday is perceived to be a success. Lawmakers added a green tax holiday that this year allowed people to escape the tax on energy-efficient appliances and other items. Cape Girardeau did not participate in that holiday.

The Cape Girardeau Chamber of Commerce will not try to dissuade the council from opting out of the tax holiday, chamber president and chief executive officer John Mehner said Friday. The council is balancing the city's needs with those of consumers, Mehner said. "They are taking the position that the impact to the budget is more important in these times than the benefits to the purchasers."

If the economy were better, the city would participate, said Charlie Herbst, Ward 2 councilman. "With the revenue loss and the way we are in a tight budget, I don't think we can fiscally be responsible and do that."

rkeller@semissourian.com

388-3642

Pertinent address:

401 Independence St., Cape Girardeau, MO

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