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Desloge voters asked to pass use tax

Desloge residents going to the polls Aug. 7 will be asked to vote “yes” on authorizing the city to impose a local use tax to help offset sales tax lost from sales on out-of-state websites such as Amazon.com.

A public hearing on the proposed use tax was held July 16 at city hall. A small number of residents were in attendance, but all were there to discuss the city’s garbage pick-up service at the special meeting of the Desloge Board of Aldermen that followed.

Addressing the board members and visitors present, City Administrator Dan Bryan said, “In the simplest terms, a use tax is a sales tax applied to the purchase of goods by Missouri residents and businesses from out-of-state vendors. “The use tax is applied to the same type of products subject to sales tax — any items exempt from a sales tax also are exempt from the use tax. The amount of use tax due on a purchase is equal to the sales tax rate in effect at the point of delivery.”

According to Bryan, applying a use tax levels the playing field between local retailers and out-of-state or online vendors, including business to business transactions.

“Forty-five states and nearly half of the more than 105 Missouri cities with populations of 2,000 or more already have a use tax and over 150 total cities currently have a use tax in place,” he said. “That includes the state of Missouri, Perryville, Piedmont, Leadington and Ste. Genevieve.

“The sales tax rate is based on the point of sale, while the use tax rate is determined based on the point of delivery. Out-of-state business purchases are subject to the use tax. While online consumer purchases are subject to a use tax, it doesn’t even come into effect until someone spends at least $2,000 in any calendar year. Most people don’t come close to spending that much money online in a year.”

The Missouri Municipal League estimates that in 2016 the potential revenue increase for the city would have been $17,500.

“While losing that amount of money certainly doesn’t make or break us, it can be a big help in helping our local small retail businesses to survive,” Bryan said. “It removes the incentive to purchase out-of-state to avoid local sales tax and encourages in-town purchases.

“Other benefits of the use tax is the diversification of our city’s tax base. It establishes a use tax in the event of future changes in legislation and will generate revenues that will go into our city’s general fund and help fund future projects in Desloge.”

The important thing to remember, according to Bryan, is that the use tax rate always equals the sales tax rate.

“If our local sales tax is reduced, the use tax will be decreased to the new sales tax rate. If the city approves a new sales tax, the use tax will go up by the same amount and if an item is exempt from the state’s or our local sales tax, it’s also exempt from the state and local use tax.”

While some might wonder how the city will be able to collect a use tax on internet sales, Bryan insists it won’t be difficult at all.

“Local use taxes are collected and distributed by the state of Missouri in the same manner as sales taxes,” he said. “The use tax mirrors the current sales tax and is not a ‘double-tax.’ The use tax we’re wanting voters to pass would only apply on out-of-state purchases where no sales tax was charged. If you pay sales tax, you won pay the use tax and vice-versa — you’ll never have to pay both.

“The bottom line is that cities like Desloge who haven’t passed a local use tax are missing out. It eliminates any discount for buying out of state. It levels the playing field for local businesses. Even if the state and St. Francois County are already collecting a use tax, our city isn’t eligible to collect it until voters approve it. The difference for local businesses and shoppers would be relatively minimal, but the impact on Desloge and its local businesses would be significant.”

“While losing that amount of money certainly doesn’t make or break us, it can be a big help in helping our local small retail businesses to survive.” — City Administrator Dan Bryan

The city of Desloge is asking local residents to vote

The city of Desloge is asking local residents to vote “yes” Aug. 7 to authorize it to put in place a use tax on internet purchases of $2,000 or more made within a calendar year. City Administrator Dan Bryan says the use tax will “level the playing field” to help local businesses compete with online giants like Amazon.com.

Kevin Jenkins is a reporter for the Daily Journal and can be reached at 573-518-3614 or kjenkins@dailyjournalonline.com

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