Council discusses tax vote, tax break for Cape

The Cape Girardeau City Council expressed unity Friday on ways to promote a quarter-cent fire sales tax, but no consensus was reached on canceling a sales tax holiday allowed under state law.

The two issues were the top two city revenue items discussed by the council at its annual retreat on Friday at the Osage Community Centre.

The fire sales tax would generate an estimated $2 million annually over the next 10 years with half of it going for police and fire operating costs and the other half for capital improvements including one new fire station and a renovated police station.

The half of the tax earmarked for capital improvements would automatically expire after 10 years.

City manager Doug Leslie said he and other city officials plan to make 40 to 50 presentations to civic clubs and community groups prior to making their case for the tax measure.

City officials said they also plan to make an effort to reach elderly residents to discuss the public safety needs. Leslie said he plans to meet at least twice with the elderly at the Cape Girardeau Senior Center and hold meetings with residents at the Chateau Girardeau retirement center.

August tax holiday

While united on the need for a fire sales tax, council members are divided on whether to suspend the city's sales tax on specified back-to-school items between Aug. 13 and Aug. 15. Council members said a decision could come next month.

State sales tax, amounting to 4.225 cents on the dollar, won't be charged on such items during the sales tax holiday. But under the new state law, cities and counties can choose not to suspend their own local sales taxes.

Cape Girardeau County government, which levies a half-cent sales tax, and Jackson city government, which levies sales taxes totaling 1.5 cents on the dollar, have yet to decide if they will cancel their local sales taxes on school supplies for that August weekend.

The city of Cape Girardeau levies 2 cents of sales taxes on every dollar purchase.

Local governments have until July 9 to opt out of the sales tax holiday. So far, 94 cities and 54 counties in Missouri have opted out, Cape Girardeau city attorney Eric Cunningham said.

Leslie said there are conflicting opinions about the impact of the tax holiday on sales tax revenue.

State lawmakers see the tax holiday as a way to alleviate the tax burden on working families as well as jump-start local retail businesses. Critics see it as a gimmick that is of little help to consumers.

Research suggests a typical family spends around $250 on back-to-school clothes annually, the Missouri Municipal League said, citing a national report.

A 6 percent sales tax exemption would represent about $15 in tax savings to a family, according to the report cited by the Missouri Municipal League.

But the Missouri Chamber of Commerce estimates that the sales tax holiday would generate a net gain for Cape Girardeau city government of over $6,000 from increased retail sales for merchandise not covered by the tax holiday.

Cape Girardeau city officials said they're concerned about canceling local sales taxes for the weekend, particularly because the tax break would include sales of computers up to a maximum purchase of $2,000.

"I am going to find it hard to forego the sales tax," Councilman Hugh White said.

"I think computer sales is the issue," Mayor Jay Knudtson said.

Some taxpayers may think it is "irresponsible" for the council to give a sales tax break when the city is hard pressed to fund its basic services, the mayor said.

Councilwoman Marcia Ritter said several merchants have told her a sales tax holiday would generate increased business.

Councilmen Charlie Herbst and Matt Hopkins said they favor the tax holiday. Herbst said that might help get business leaders to support the fire sales tax in the June 8 election.

mbliss@semissourian.com

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