USE-TAX AMOUNTS TO LOCAL ENTITIES REMAIN A MYSTERY

With the Aug. 6 election date moving closer, Missouri Department of Revenue officials still don't know how much use tax cities can anticipate receiving.

Voters in Cape Girardeau, along with those in Jackson and Cape Girardeau County, will decide in August whether to impose a local tax on out-of-state purchases.

But most voters won't pay a significant amount of use tax because of a $2,000 cumulative exemption. That means a Cape Girardeau resident would have to buy that amount or more in a year through orders and television shopping networks before paying any use tax.

If they did, the rate would be 1.75 cents per dollar spent -- the same as Cape Girardeau's sales tax rate. And they would file their tax with the Missouri Department of Revenue on a new Form 4340.

City finance director John Richbourg said nobody knows for sure how much additional money cities will receive if the tax passes. Under a similar state tax declared unconstitutional by the Missouri Supreme Court, the amount of use-tax revenue each city and county received was tied into its sales tax revenue.

Cape Girardeau took in $1.7 million in about three years under that system, but the money is slowly being refunded to businesses that paid the tax.

The new ballot issue says that cities and counties only will receive the amount of use tax their businesses and individuals paid.

The new wording could mean less money for cities with lots of retail stores but few big businesses. That's because businesses pay the tax only on items purchased outside the state and stored, used or consumed within Missouri.

For example, JCPenney could buy several hundred skirts from Texas but wouldn't have to pay a use tax. That's because the skirts would be sold and Cape Girardeau would collect sales tax.

But if Southeast Missouri Hospital bought several cases of syringes from a Texas company, the hospital would have to pay use tax. The hospital would use the syringes, not resell them.

The proposed use tax has a twofold purpose. It protects Missouri businesses from out-of-state competitors by taxing the competitors' merchandise. That way, consumers aren't tempted to buy outside Missouri to save themselves sales tax. The proposed tax also lets cities and counties collect tax revenue they might otherwise miss if consumers bought outside the state.

Elected city officials differ on their enthusiasm about the use-tax issue. Councilman James Williamson Jr. said he expected a positive outcome once people realize the benefits for the city.

The question is whether a use-tax vote in August and a possible water system sales tax vote in November will be too much to handle.

"It could possibly be," Williamson said. "Some people get flustered when so much is thrown at them at one time, but like I say, if the people realize it is necessary for the community to survive, prosper and grow, they will pass it."

Councilman Jack Rickard declined to predict an outcome on the use-tax issue. "We'll just have to see how the election turns out," he said.

CAPE USE TAX

Q: What is the local use tax?

A: The local use tax is applied, in lieu of the local sales tax, on transactions that individuals and businesses conduct with out-of-vendors, including catalog and direct market sales.

Q: When does a city use-tax ordinance take effect?

A: If the city votes approve the use tax on Aug. 6, then the tax becomes effective Oct. 1, 1996, as long as the director of revenue receives notice of acoption of the local use tax on or before Aug. 16.

Q: What purchases are exempt from the use tax?

A: If an item is exempt from the sales and local sales tax, it is also exempt from the state and local use tax.

Q: How much will my city receive from a local use tax?

A: It is difficult to estimate the revenue from a local use tax because it is based on the purchases made by individuals and businesses in the city from out-of-state vendors. There is no information on such sales in prior years.