AREA AGENCY BACKS USE-TAX PLAN

The membership of the Southeast Missouri Regional Planning and Economic Development Commission voted at its July 23 meeting to go on record in support of passage of the Missouri local use-tax proposal which will be before many voters in cities and counties on Aug. 6.

There are several things that the voters need to be aware of before they vote on this issue. First of all, the use tax is a substitute for state and local taxes on goods or materials that are purchased out of state. It is called a use tax because the goods and materials are brought into Missouri and "used" by the purchaser. Taxes that are levied in the state are called "sales taxes," and those that are levied on goods that are purchased from out of state are called "use taxes."

In many ways, approval of the use tax by local voters would level the playing field for businesses that are in their hometowns and counties and throughout Missouri with those out-of-state sellers of goods who do not have to charge or pay any taxes on materials that are shipped into Missouri at the present time.

The use tax cannot exceed the maximum sales tax presently charged by a local government. This equates to fairness to the companies that ship materials into Missouri and to our local counties and communities. Missouri also has authority to levy a use tax on out-of-state sales in an amount equal to the in-state sales tax of 4.225 percent.

Is this a new tax? No, in fact, it is not. In 1991, the Missouri Legislature gave local governments the authority to implement and enforce the local use-tax collection and distribution on interstate sales. A flat statewide tax of 1.5 percent in lieu of local taxes was instituted, because it was easier to implement and less costly for the Missouri Department of Revenue to administer. Only those counties and cities that have voter-approved sales taxes can implement the use tax on out-of-state sales. Out of the 114 counties in Missouri, 112 have collected a use tax. Numerous cities throughout the state also collected the use tax, which began to be implemented on July 1, 1992. The taxes ended in April of this year due to a court case because of the fact that local sales taxes were higher in some counties and cities than others. In other words, due to the statewide levy of 1.5 percent on out-of-state taxes, the tax was considered to be inequitable. Thus, the court ruled that the tax was unconstitutional.

The Missouri Legislature has authored a new law which provides opportunities for each city and county to institute the use tax on out-of-state sales in order to continue to be able to collect these monies.

With voter approval, use taxes would be collected on catalog companies and big business and industry and a few smaller consumers. Under the new law, any person is exempt from paying tax and filing a use-tax return with Missouri when he or she purchases less than $2,000 in merchandise a year from out-of-state businesses that did not charge it. Thus, most local voters would feel no impact from re-instituting the use tax.

Once approved by local voters, the use tax would always mirror the local sales-tax rate and wouldn't be piled on top of this tax rate but is, again, a use tax in lieu of sales tax on out-of-state goods purchased.

Without passage of the use tax, out-of-state companies would have an advantage over in-state companies in that they do not have to pay an amount of taxes equitable to that charged by in-state companies. Therefore, there would be a disadvantage to Missouri-based businesses in selling even in Missouri. Out-of-state companies simply could sell at cheaper prices, because they could avoid paying the local sales tax because they are located out of state.

What would the use-tax revenue be used for? Local counties and municipalities would utilize the use-tax revenue to provide a variety of services for the citizens of their counties or cities. The funding would be important from the perspective that it would help pay for local services without any additional local tax load being placed on a majority of the voters.

Again, the Southeast Missouri Regional Planning and Economic Development Commission is urging voters in the region to support their local governments and their local businesses by passage of the use-tax issue.

Thomas G. Tucker is the executive director of the Southeast Missouri Regional Planning and Economic Development Commission based in Perryville.