COUNTY AUDITOR EXPRESSES CONCERN OVER DECLINE IN SALES TAX REVENUE

JACKSON -- Cape Girardeau County government pocketed nearly $5 million in sales tax revenue this year. That's up more than $224,000 or 4.7 percent from a year ago, Cape Girardeau County Auditor H. Weldon Macke said Thursday.

But the revenue growth is less than the 7 percent increase experienced in 1998 over 1997 figures.

Macke worries that growing Internet sales will eventually lead to declines in the county's sales tax revenue. That's because those who buy merchandise or services via the Internet don't pay sales taxes.

Congress and President Clinton have shown no interest in taxing Internet sales, Macke said. Taxing the Internet isn't popular with other politicians either.

"The governor of Virginia doesn't think any Internet sales should be taxed," he said.

"Everybody is asleep on this," he said. "Nobody wants to fight it."

There is a federal moratorium on taxing Internet sales. An advisory commission is studying the issue and is expected to report to Congress next year, said Dick Burke, executive director of the Missouri Association of Counties.

"County governments really live off sales tax anymore," Burke said in a telephone interview. "Counties can't function on property tax alone."

Burke said the Internet sales is the biggest fiscal issue facing local and state governments nationwide.

On-line sales this Christmas season alone are expected to total about $6 billion, business analysts say. That's twice as much as last year's holiday sales. Internet retailers are spending hundreds of millions of dollars on TV commercials, magazine ads and billboards, and offering bargains.

Macke said stores nationwide increasingly are encouraging their customers to buy on-line.

To the consumer, buying on-line may seem like a bargain because he or she isn't paying sales tax.

But Macke said it is a major concern to counties like Cape Girardeau County that depend heavily on sales tax to fund county government. The half-cent sales tax generates about half of the county's $10 million budget.

By comparison, the county gets only about $500,000 a year in property tax revenue. The property tax money goes to operate the county's highway department.

"We could go downhill," he said. "The Internet is going to kill us."

Presiding Commissioner Gerald Jones agreed. He said Internet sales could cut into sales tax revenue for the cities of Cape Girardeau and Jackson too.

It's been 17 years since Cape Girardeau County has levied a property tax for its general revenue fund. But Macke told county commissioners that the county in the future might have to levy a property tax for its general fund if Internet sales lead to a drop in sales tax revenue.

"If we are not able to recoup sales taxes, we will have to make it up in property taxes," he said.

Macke said taxpayers likely would prefer taxing Internet sales than hiking property taxes. Said Macke, "It is pay now or pay later."