Jackson places use tax on April ballot

The Jackson Board of Aldermen on Tuesday unanimously approved placing a use-tax question on the ballot for an April 8 election.

Jackson Area Chamber of Commerce director Brian Gerau and Cape Girardeau Area Chamber of Commerce president and CEO John Mehner spoke in favor of a use tax, which is levied on out-of-state purchases, during the public hearing at the meeting Tuesday.

Gerau called a use tax a "pro-Missouri, pro-Cape Girardeau and pro-Jackson initiative" that eliminates the incentive for residents to shop out-of-state. The city can't afford businesses relocating to other states, or the lost revenue, he said.

If a resident buys a vehicle in another state, the dealer can offer financing and vehicle maintenance out-of-state as well, which is lost revenue, Gerau said, and it is possible local taxes would have to be raised to make up for it.

"The loss of revenue and loss of jobs hurts everyone," he said.

The incentive for residents to buy items out-of-state should not be provided or honored, Mehner said.

"That transaction should be on the same level to protect those who invest in our area," he said of out-of-state purchases.

Two Jackson residents who oppose a use tax spoke during the public hearing.

David Larson said he believed a use tax is not necessary.

"People are not streaming over to Illinois to buy things over there," he said.

Taxpayers are being left out of the process, and money spent on a use tax could be spent elsewhere, Larson said.

Alderman Mark Dambach questioned Larson, saying the board was only to vote on whether the use tax question should go on the ballot.

Dambach said he has "complete and total faith in the residents of Jackson" to vote appropriately on the issue.

Supporters of a use tax say the challenge of passing it is many people don't understand if they buy local, they will pay the same amount in sales taxes as they would if voters approve a use tax. The use tax only applies to purchases out of the state.

Bob Neff, general manager of Ford Groves, said a use tax would have a significant impact on business. From a business standpoint, it is unfair that his about 65 employees are being put at a competitive disadvantage, he said.

If a car dealer in Cape Girardeau and dealer in Illinois charged the same price for a vehicle, the customer would save money by purchasing the vehicle from the Illinois dealer because they would not be responsible for paying a sales tax as they would if they bought the vehicle in Cape Girardeau and the city didn't have a use tax, he explained.

If a dealer is not competitive pricewise, they're not in the game, Neff said.

The Missouri Supreme Court ruled in 2012 that local governments could not charge sales tax to Missouri residents on certain purchases made out of state.

The legislature and governor have since allowed governments to keep collecting local sales taxes on purchases with the passage of a law in 2013, but it stipulates governments can only keep charging tax on those purchases through a voter-approved use tax. A use tax measure must then be approved by voters before November 2016.

If passed, use tax amounts will equal the amount of general sales tax charged by governments.

The state of Missouri already has a voter-approved use tax of 4.225 percent, and Cape Girardeau County commissioners unanimously approved placing the use tax question on the April 8 municipal ballot after a public hearing by the commission Jan. 16.

Area chambers of commerce recently have voiced support of a use tax because they believe it will "level the playing field" for local businesses such as auto dealers.

An estimate in 2012 by the Missouri Association of Counties showed Cape Girardeau County's revenue would drop about $250,000 annually if the state Supreme Court ruling that disallowed collection of sales taxes on out-of-state purchases was left in place, according to previous Southeast Missourian reporting.

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