Seeking to provide a more level playing field for local businesses which are at a disadvantage with out-of-state competitors as a result of a 2012 Missouri Supreme Court ruling, Warren County officials will ask voters to approve a local use tax in April.
The Warren County Commission Tuesday voted unanimously to approve the wording of the local use tax proposal and to place the measure on the April 2 municipal election ballot.
“This is aimed at out-of-state vendors to even the playing field for local businesses,” remarked Hubie Kluesner, Southern District commissioner.
Citing information provided by the Missouri Association of Counties (MAC), Presiding Commissioner Arden Engelage stated that Warren County will lose approximately $173,000 in revenue if the local use tax is not approved.
If voters reject the proposal, Engelage said the county will have to find another source of revenue to help cover the shortfall, but he stressed that no new sources of funding had been specifically identified by the county commission.
Commissioners previously suggested the county’s property tax rates could be increased, but they backed off that position when asked if that option would be pursued during a discussion on the measure this week.
“We pride ourselves on having one of the lowest personal property tax rates in the state,” commented Dan Hampson, Northern District commissioner.
Hampson added that imposing a 1.5 percent tax on purchases made from vendors outside Missouri would have a minimal effect on Warren County consumers.
Englelage also explained that the local use tax primarily would apply to “items that must be licensed,” such as vehicles and trailers.
It also would be levied on large purchases of wholesale items used for infrastructure projects, he noted.
However, according to information from MAC, businesses and industries which buy large amounts of raw materials to manufacture products for resale do not pay use taxes on those purchases.
The Missouri Supreme Court ruled in January 2012 that items such as vehicles, boats and trailers purchased outside Missouri were not subject to sales taxes, unless individual counties adopted local use taxes.
As a result, counties without local use taxes, such as Warren County, are unable to collect revenue on such purchases.
The wording of the proposal would establish the rate of the local use tax to be equal to the current local sales tax rate, which is 1.5 percent.
If voters approve an increase or decrease in the local sales tax rate, the use tax rate also would be raised or lowered, according to the ballot language.
Additionally, people would not be required to file a use tax return if their purchases from out-of-state vendors do not exceed $2,000 in a calendar year, according to the proposal’s wording.
According to information Kluesner provided to The Record, 43 Missouri counties have local use taxes in place.