Festus residents will be asked in November to approve a use tax that would allow the city to charge its 3-cent sales tax on internet purchases. The measure, called Proposition Public Safety, requires a simple majority vote to pass.
The City Council voted 7-0 on Monday to place the measure on the Nov. 4 ballot. Ward 1 Councilman Dave Boyer was absent from the meeting.
The following is the ballot language the council approved: “Shall the city of Festus impose a use tax at the same rate as the total local sales tax rate (currently at 3 percent) provided that if the local sales tax rate is reduced or raised by voter approval, the use tax shall also be reduced or raised by the same action?”
The overall sales tax rate in Festus is 9.35 cents per $1 spent. Of that, 4.225 cents goes to the state, 3 cents to the city, 1.625 cents to Jefferson County and 1/2 cent to the Joachim-Plattin Ambulance District.
If approved, the Festus 3-cent sales tax would be charged when people buy items online, just like they’re charged when they make purchases at brick-and-mortar businesses in the city.
Festus officials said the revenue generated by the sales tax would be used to help fund the Festus Police and Festus Fire departments, including local emergency dispatch services.
Mayor Sam Richards said Prop P would provide much-needed revenue for those departments.
“The revenues we’ll get from Prop P will be equally divided between the fire and police departments for training, personnel, equipment and facilities,” he said. “This is an excellent opportunity (to add revenue streams for the police and fire departments). We need to get it passed.”
He also said passage of the measure would help correct an unfair situation for local businesses that must charge sales tax, putting them at a disadvantage since online vendors don’t have to charge it.
“This would level the playing field for our local businesses as far as sales taxes,” Richards said.
City Administrator Greg Camp and other officials stressed that Prop P is not a new tax, but a tax on out-of-state vendors equivalent to a local sales tax.
According to a staff report on the proposition, a city the size of Festus with approximately 13,000 residents could generate about $600,000 annually through the internet sales tax.
The staff report further states that the money generated through the tax could be used for, or toward constructing a new fire station No. 2; replacing a 20-year old fire ladder truck; upgrading the city’s 911 dispatch system to NextGen 911; expanding and improving training opportunities, including constructing a new police training facility; and staffing the fire and police departments and dispatch services.
The City Council has been discussing the possibility of building a police training facility that could include an indoor shooting range, although the discussions are in the early stages, and no specific plans, such as where the facility would be built, have been made, city officials said.
Camp said Festus residents could tangibly show their support for fire and police services by supporting Prop P.
“In the last year we’ve had our residents let us know they want to support our fire and police get better facilities and training,” Camp said. “This is an opportunity to do this.”
The city previously placed similar use tax measures before voters, which failed, most recently in April 2022, when residents voted it down by 640-843, or 43.16 percent in favor to 56.84 percent against.
Missouri residents already pay the 4.225-cent sales tax that goes to the state on internet sales, but not all vendors collect it.
State residents who buy more than $2,000 in untaxed goods and services are supposed to report that on their state income tax returns.
A state law that went into effect in January 2023 further requires businesses not based in Missouri to pay the state sales taxes if they had more than $100,000 in business in the previous calendar year.
However, the 2023 law applies only to state sales tax. Counties, cities and other entities that collect sales taxes must ask their voters to approve a “use tax” on internet purchases and other out-of-state sales that is equal to their sales tax rates.
Camp said more than 50 percent of Missouri cities already collect internet sales taxes.
Jefferson County and the county’s municipalities have asked voters to approve the tax, but so far the measure has been approved only in Kimmswick, Crystal City and most recently Byrnes Mill.