Voters in the city of Union will be asked to pass a use tax in the general municipal election Tuesday, April 3.
A use tax would help capture revenue for out-of-state sales, including online purchases from out of state vendors and automobiles purchased outside of Missouri.
The use tax is applied to the same type of products subject to traditional sales tax, the Missouri Municipal League (MML) said.
The tax only applies to out-of-state purchases where no sales tax is charged. Consumers would never pay both a sales and use tax.
Sales tax applies to purchases made at retail stores within Missouri, while a use tax applies to purchases made from out-of-state vendors. Because purchases cannot fall into both groups, there is no way that a purchase would be taxed twice.
The purpose of approving the tax is that if the state begins collecting taxes on internet sales and out-of-state sales, the city tax also will be collected at that time.
It is not a tax increase or a new tax, City Administrator Russell Rost noted.
In 2016, the city of Union could have collected approximately $49,000 in use tax.
Last year, the city missed out on approximately $52,000 in additional revenue by not having a use tax.
The estimates are according to numbers provided by the Missouri Department of Revenue.
State statute requires that cities and counties pass a referendum before a use tax can be collected.
According to a pamphlet mailed out by the city, the additional revenue could help fund things like new patrol vehicles, sidewalks, street maintenance, water and sewer improvements.
The ballot language will be as follows:
“Shall the city of Union, Missouri, impose a local use tax at the same rate as the total local sales tax rate, currently 2 percent provided that if the local sales tax rate is reduced or raised by voter approval, the local use tax rate also shall be reduced or raised by the same action? A use tax shall not be required to be paid by persons whose purchases from out-of-state vendors do not in total exceed $2,000 in any calendar year.
The Missouri Supreme Court ruled in 2012 that collection of out-of-state taxes without a use tax was unconstitutional.
In 2013 state legislators passed a bill temporarily reinstating the collection of those taxes by local governments.
Without the voter-approved use tax, collection of those taxes ceased in November 2016.
Franklin County passed a proposition allowing the tax to be collected in 2016.
New Haven voters also will have a ballot issue.
The city of Washington already collects the tax.