Use tax becomes a ballot and business battleground

An issue that's been considered and debated by local city and county governments for the past two years could come to a conclusion after voters cast their ballots April 8.

Voters in Cape Girardeau, Jackson and Cape Girardeau County will decide whether to approve a use tax equal to the sales tax collected by the respective municipality. That equals 2.75 percent in Cape Girardeau, 2 percent in Jackson and 1 percent in Cape Girardeau County. If approved, the city and county use taxes would be combined with the state's use tax of 4.225 percent.

The voter-approved tax can be levied on out-of-state purchases of titled vehicles, including automobiles, boats and other recreational vehicles, along with purchases of other "tangible personal property" as defined by state law. Consumers are required to file a use-tax return with the Missouri Department of Revenue only if their untaxed purchases from out-of-state vendors in a calendar year equals more than $2,000.

Use-tax questions began popping up on ballots across the state after a Missouri Supreme Court decision in March 2012 changed the way local counties and municipalities could collect taxes on vehicles. Until that time, no matter where a person bought a car, sales taxes were paid during its registration according to the rate associated with the buyer's home address. The ruling said local sales taxes could not be levied on out-of-state purchases of motor vehicles, trailers, boats and motors.

In July, Gov. Jay Nixon signed a law that allowed municipalities to resume collecting the taxes, but required them to hold elections about use-tax questions before November 2016. Before the law's passage, however, only the state use tax of 4.225 percent was levied in areas with no local use tax, giving many Missouri customers an incentive to travel to neighboring states such as Illinois to buy vehicles and other big-ticket items and avoid potentially hundreds of dollars in taxes.

As a result of the ruling, Cape Girardeau County lost an estimated $250,000 in sales-tax revenue in 2012, according to estimates from county officials.

Cape Girardeau city manager Scott Meyer said it's difficult to determine an exact number, but the city also could lose about a quarter of a million dollars a year in revenue if the use tax -- or a similar "permanent fix" -- is not approved before the November 2016 deadline.

The decision to place local use-tax questions on the April ballot was made after chambers of commerce in Cape Girardeau and Jackson delivered presentations supporting the measure to the city and county governments.

While the use-tax issue initially centered around vehicle purchases, its focus has shifted to protecting local businesses. Cape Girardeau County associate commissioner Charlie Herbst said protecting local businesses from the unfair competition of the Internet, where consumers can buy products that include minimal or no sales tax charges, is an important part of "looking out for the future."

"I think we need to support our local businesses because that's who we ask to advertise in our newspapers and our radio stations. They're the ones we go to to ask about chili supper tickets and benefits and things like that," he said.

"... As a commissioner, I think it's my job not to support [the use tax], but to put it out there. I think it's my responsibility to ask voters, 'Is this something you want to do?'"

Herbst said he believes when voters make a decision in April, it will be an informed one. The county left the question off ballots last year to allow more time for education and awareness efforts. Part of the reason behind this confidence, he said, is the combined effort of the local chambers of commerce to spread the word and answer questions about the use tax.

John Mehner, president and CEO of the Cape Girardeau Area Chamber of Commerce, said the tax "absolutely" could make a difference for local businesses.

"Our goal is to give the same competitive advantage for local businesses as out-of-state businesses," he said. "A local business that sells product should not be at a competitive disadvantage because of our tax structure."

As part of its educational efforts, Mehner said the chambers try to stress that people will never be double-taxed if a local use tax is approved. If a consumer pays sales tax on a purchase, a use tax will not be applied. He also said they want to communicate to the public that both groups advocate the use tax because of the benefits it offers to local businesses.

"It's not the chamber's revenue. It's not something we will get revenue from," Mehner said of the use tax. "This is a city and county thing. This is about making sure our local businesses are not at a competitive disadvantage."

While the governing bodies of Cape Girardeau, Jackson and Cape Girardeau County have been "extremely open," Mehner said other people are skeptical of the tax. Brian Bollmann, chairman of the Cape Girardeau County Tea Party, falls in the latter group.

Bollmann and a few other Tea Party members organized a campaign committee called No MO Tax. He said they created the group for one reason: "We think we're taxed enough."

Taxes in Cape Girardeau and Jackson, as well as the county, have continued to increase over the years as residents' salaries and wages decreased, Bollmann said, and he's concerned whether asking voters to approve another tax is fiscally responsible.

"They're basically telling us it will level the playing field for businesses by taking money from the citizens and giving it to the government, which is absurd," said Bollmann. " ... The government can always make a case for why they need your money. Fiscal responsibility is not just balancing your budget; it's leaving money in citizens' pockets."

Bollmann said the committee plans to organize last-minute events over the next couple of weeks, and those who wish to be involved may visit nomotax.org.

Additional information and frequently asked questions about the use tax can be viewed on the Cape Girardeau Area Chamber of Commerce's website at capechamber.com/usetax.

srinehart@semissourian.com

388-3641

Pertinent address:

Cape Girardeau, Mo.

Jackson, Mo.

Ballot language for use tax questions in the April 8 election

City of Cape Girardeau

In an attempt to eliminate the current sales tax advantage that Non-Missouri vendors have over Missouri vendors, shall the City of Cape Girardeau, Missouri, impose a local use tax at the same rate as the total local sales tax rate, currently 2.75%, provided that if the local sales tax rate is reduced or raised by voter approval, the local use

tax rate shall also be reduced or raised by the same action? A use tax return shall not be required to be filed by persons whose purchases from Out-of-State vendors do not in total exceed two thousand dollars in any calendar year.

City of Jackson

In an attempt to eliminate the current sales tax advantage that Non-Missouri vendors have over Missouri vendors, shall the City of Jackson, Missouri, impose a local use tax at the same rate as the total local sales tax rate, currently 2%, provided that if the local sales tax rate is reduced or raised by voter approval, the local use tax rate shall also be reduced or raised by the same action? A use tax return shall not be required to be filed by persons whose purchases from Out-of-State vendors do not in total exceed two thousand dollars in any calendar year.

Cape Girardeau County

In an attempt to eliminate the current sales tax advantage that Non-Missouri vendors have over Missouri vendors, shall the County of Cape Girardeau, Missouri, impose a local use tax at the same rate as the total local sales tax rate, currently one percent (1%), provided that if the local sales tax rate is reduced or raised by voter approval, the

local use tax rate shall also be reduced or raised by the same action? A use tax return shall not be required to be filed by persons whose purchases from Out-of-State vendors do not in total exceed two thousand dollars in any calendar year.