Madison County and Fredericktown seek use tax

Like St. Francois County, the City of Fredericktown and Madison County are asking citizens to vote Tuesday on whether or not the entities can collect a “use tax.”

The city measure will appear on the ballot as, “Shall the City of Fredericktown, Missouri Madison County, Missouri impose a local sales tax rate, 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?” 

The county measure reads: “Shall the County of Madison, Missouri impose a local use tax at the same rate as the local sales tax rate, 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?”

“If passed, the use tax would make it to where purchases from online vendors located outside of the state are collecting the same local taxes as those purchases made from local businesses,” City Administrator James Settle said. “If you purchase light bulbs at Thal’s Hardware Store you will pay the local city sales tax. Now if you buy those same light bulbs online from another state you would not be charged the local sales tax.”

Settle said this hurts the local businesses but also hurts the communities that rely on those taxes.

“The city, school, hospital and ambulance department are all sales tax-funded,” Settle said. “As we all switch over to making more and more of our purchases online, the budgets for these vital community assets will decrease.”

Settle said this will not be a double tax, and if you already pay local sales tax on a purchase, then you will not pay a use tax on the same purchase. The taxes are also the same rate. 

“This would not be increasing taxes but would allow us to collect tax money on out-of-state purchases that we previously could not collect sales tax on,” Settle said. “Funds generated will help pay for roads, sidewalks and infrastructure projects.”

According to a census done by the U.S. Department of Commerce, online retailers made up 12.4% of total retail sales in 2021 and online shopping saw a boost of 36.3% by the end of 2020, likely due to the COVID-19 pandemic.

“Just like everyone else, inflation hits us too,” Madison County Commissioner Larry Kemp said. “If passed, the county would get 2.5% and the city would get 2.5%. This is the current sales tax already collected locally but would also be collected on out-of-state, mostly online, purchases.”

Kemp said the ballot language is confusing but is written the way the state of Missouri requires it to be on every ballot. 

“It is just not fair to the local businesses,” Kemp said. “If you buy something from a local business that business has to collect the sales tax. If you buy the same item out of state, then they don’t pay the sales tax. This makes it an advantage to the companies out of state to promote purchases and take business away from our local commerce.”

Kemp said he too fears the changes in revenue for the county as local sales tax money begins to decline. He said the sales tax money goes mostly toward salaries, ambulances, roads and bridges.

“We just would like for you to consider it, and we think it will help the community in a positive way,” Kemp said. 

The City of Fredericktown and Madison County are both asking the citizens to vote on whether or not the entities can collect a “use tax.”

Victoria Kemper is a reporter for the Daily Journal. She can be reached at 573-783-3366 or at vkemper@democratnewsonline.com