City officials Monday agreed that they would not pursue a local option use tax on the April ballot.
Last month, Franklin County Presiding Commissioner John Griesheimer asked the Union Personnel, Finance and Public Works Committee to join the county in seeking the tax to capture sales tax on large items purchased out of state.
Griesheimer said he would meet with other municipalities in the county and ask them to also pursue the tax. He noted that the county has not voted to seek the tax.
However, committee members stated that now is not the time to ask residents for a new tax.
“I don’t think we have any chance at all of passing a tax in today’s environment,” said Alderman David Pope. “It would be a complete waste of time.”
The local option use tax would help capture the municipal and county sales taxes that the Missouri Supreme Court ruled were unconstitutional to collect on vehicles, marine and trailer sales if the purchase was made out of state, according to Griesheimer. The ruling went into effect in March.
It is estimated that the Supreme Court ruling will cost Franklin County over $1 million in sales tax revenue a year.
State sales taxes, at the rate of 4.225 percent, still are collected on all vehicles registered to Missouri residents.
If a vehicle is purchased in Illinois the buyer is not subject to the municipal sales tax, only state sales tax. If a vehicle is purchased in Missouri, for the same price, the buyer still is required to pay the local sales taxes.
Griesheimer said there was a bill to fix the tax revenue hole created by the high court approved last legislative session, but it was vetoed by Gov. Jay Nixon because it included a retroactive clause.
There are talks of a new bill in the upcoming legislative session, according to City Administrator Russell Rost.
“If there are rumblings of the state and federal government trying to fix what is going on people will vote ‘No’ in fear of being double taxed” said Alderman Vicki Hooper.
Last month, Griesheimer said if a similar bill is approved, it could get challenged again in the Supreme Court.
The city of Washington is the only entity in the county that still receives local taxes for vehicles purchased out of state through the voter-approved local option use tax.
The city of Washington currently has a 2 percent option use tax. That means Washington could still collect 2 percent in taxes on vehicles purchased by city residents, even if the vehicle came from out of state or from a private individual.
Rost has said he was informed earlier this year that the city would lose about $42,000 annually in tax revenue as a result of the Supreme Court ruling.
