At the heart of the use tax measures Boone County residents will be voting on Tuesday, Nov. 7, is online shopping.
Local store around the country must compete with out-of-state retailers as more people shop online. Many of these out-of-state online businesses do not have to pay local sales tax, allowing them to sell some products for lower prices.
Creve Coeur Camera manager David Pott said he knows this issue first-hand.
“Unfortunately we have people who will sometimes go elsewhere in order to get the better deal and that does hurt us in the long run,” Pott said.
This trend hasn’t just hurt local retailers, though. It’s hit the city, too.
Mike Matthes is the Columbia City Manager. In his State of the City address this June, he said as more people buy online, the city has seen a reduction in sales tax revenue.
“We have, and we will continue to have, a serious revenue problem,” he said. “We built our funding system on a sales tax approach with no notion of a nontaxable online world.”
This ultimately means cuts to the city budget, said Columbia City Councilmember Michael Trapp.
“This is a slow motion crisis,” He said. “We are forecasting a 1 percent decrease in revenue, we’re also expecting a 2 percent inflation rate and a 2 percent increase in population. We had to do major budget cuts this year to account for our declining revenue.”
When voters get their ballots, they’ll see two measures: a use tax for Boone County and a use tax for their town or city. The use tax will be set at the same rate as the sales tax in each area. In Boone County that’s currently 1.75 percent. In Columbia, Ashland and Harrisburg it’s 2 percent. Voters can vote yes or no to one or both taxes.
Boone isn’t the first Missouri county to consider use taxes, said Boone County Clerk Taylor Burks.
“This is a growing trend among jurisdictions in Missouri and around the country,” He said. “Use tax is really something that would be best addressed at the state or federal level, but because it’s not local communities like Boone county, Columbia, Ashland, Harrisburg- they’re doing it to try to address that gap in changing purchasing habits of citizens of Boone County.
If adopted, businesses and individuals would report any out-of-state spending of more than $2000 in a year on their annual state tax returns. Then they’d pay the tax on those purchases.
Missouri already has a state use tax, which matches the state sales tax rate, according to the Missouri Department of Revenue.
Both Columbia and county officials say use tax revenue would most likely go to services such as law enforcement, but final decisions won't be made until after a vote.
Trapp said local use taxes could get conversations going on a national level about how to properly tax these out of state purchases.
“It puts us in a position where we can lobby our state and federal partners and encourage them to act,” Trapp said.
For store manager David Pott at Creve Coeur Camera, there needs to be a solution that works for local businesses.
“Us, the smaller shops; the mom and pop shops,” he said, “have trouble competing with these individuals who don’t charge tax when we have to charge the tax.”