Official Is Unsure How Use Tax Would Impact Vehicle Sales - The Missourian: Local News

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Official Is Unsure How Use Tax Would Impact Vehicle Sales

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Posted: Thursday, April 3, 2014 1:00 pm

It is unclear if Franklin County will still have to give voters a chance to repeal a sales tax on out-of state vehicle purchases if a use tax passes next Tuesday, an official said.

The Missouri Department of Revenue has not provided a clear answer, according to Dick Burke, director of the Missouri Association of Counties.

“We’re just unsure,” Burke said. “It’s just a convoluted issue.”

Next Tuesday, voters will be asked to approve a 1.5 percent use tax on certain items purchased out of state and brought back to Franklin County.

Under a new law, jurisdictions that have not “previously” approved a local use tax must put to a vote of the people between November 2014 and November 2016 whether to discontinue collecting a sales tax on out-of-state vehicle purchases.

The confusion lies in the word “previously” that is stated in the new law. The question is when does “previously” begin.

Does it mean that Franklin County should have already had a use tax in place to avoid asking voters by November 2016 whether they want to repeal the sales tax on out-of-state vehicle purchases?

Or does it mean that Franklin County still has a window of opportunity to pass the use tax to avoid asking voters whether they want to repeal the sales tax on out-of-state vehicle purchases?

One thing is certain, Burke said: Counties that do not pass a use tax will definitely have to ask voters by November 2016 whether they want to repeal the sales tax on out-of-state vehicle purchases.

In Missouri, 56 out of 114 counties have the use tax.

‘A Pro-Franklin County Tax’

It is still a good idea for counties to pass a use tax regardless of how vehicle sales are affected, Burke added.

He called it a “pro-Franklin County tax” because it protects local merchants and brings in additional revenue to support services.

It affects much more than just vehicle sales, he said. For instance, some Internet sales could be subject to a use tax, Burke said.

A use tax levels the playing field for local businesses by taking away the incentive for people to shop out of state to avoid taxation, officials say.

/local_news

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