Voters across Jefferson County will decide on Aug. 7 whether the county and its cities can collect their sales taxes on online purchases.
Officially called a “use tax,” a number of propositions with different names will appear on the ballot, but all have the same purpose.
Countywide, the issue is called Proposition Fairness. In Arnold, Festus, Crystal City, Herculaneum, Byrnes Mill, Hillsboro, Pevely and De Soto, voters also will decide the fate of Proposition F. In Kimmswick, it will be called Proposition U.
In each case, a simple majority is needed for passage.
The ballot language asks voters to authorize a use tax at the same rate as the existing local sales taxes. The county’s sales tax rate is 1.625 percent, and the rate would vary for each city.
“It’s important for people who live in a city that you’ll be voting twice, but that’s because you now are paying sales tax to the county and also to the city,” said Tony Becker, chairman of Yes for Fair Business, a group promoting the issues.
He noted that Missouri residents already are obligated to pay state use taxes on internet sales, although many people may not realize it. While some large online retailers collect the tax upfront, those who buy more than $2,000 in untaxed goods and services online are supposed to self report that on their state income tax return.
There are two main goals behind the use tax propositions, Becker said. First is ensuring that local governments continue to have money to function.
Officials noted that over the last couple of decades, voters supported a move to shift the taxing burden from property taxes to sales taxes, which were viewed as more equitable.
However, with many people buying online – in some cases to avoid paying local sales taxes – that revenue stream is starting to dry up.
“If the current system we have continues unchanged, there is an estimate that Jefferson County local taxing districts stand to lose $100 million in revenue over the next five years,” Becker said. “That’s money that can’t be spent on roads, on law enforcement, on the infrastructure to support new jobs.”
The county’s most recent payment from sales taxes, for sales made through mid-May, showed a modest increase of 2.3 percent over the same period in 2017, which had a drop of 2.14 percent after gains of 4.22 percent in 2016 and 9.99 percent in 2015.
The other main goal behind the propositions, Becker said, is underlined by the name of the countywide issue.
“We need to level the playing field for local businesses,” he said. “It’s not fair for local businesses that online retailers can sell the same products for less because they aren’t collecting local taxes.”
Becker said the retail scene has changed over the years.
“People don’t go and buy a TV set or big ticket items in a store anymore,” Becker said. “They go to a store, pick out what they want and then get on their phone while they’re in the store and buy it for $100 less, and it arrives at their door in a couple of days.”
In addition to internet sales, he said, the use tax also affects the purchase of goods and services from out-of-state firms.
“For instance, a lumber yard in Jefferson County can lose out on hundreds of dollars because someone who’s building a house can buy the same lumber in Illinois and will save 7 percent or 8 percent in local sales taxes,” he said. “That is not an even playing field.”
The ramifications of not passing the propositions is different countywide and in the cities.
In the county, the County Council has the authority to raise the property tax rate as sales tax revenue goes down, and vice versa. In 2016, the county charged no property taxes.
“Eventually, property owners will shoulder more of the tax burden in the county,” Becker said.
In the cities, the stakes are higher.
“The passage of Proposition P (a property tax approved in April to help finance Jefferson County Sheriff’s Office operations) has put us in the cities behind the eight ball,” said Becker, who also is a Crystal City councilman. “We’re going to have trouble keeping up with rising law enforcement salaries, and in the long term, we’re going to have to find new streams of revenue if the sales tax drops out.”
Becker said more than 160 cities in Missouri already approved similar use tax propositions.
There is no known organized opposition to the issues, and Becker said many people are receptive to his group’s message.
“We understand that no one wants a new tax, but this isn’t a new tax – this is collecting a (sales) tax that voters have approved in the past, but the method of retail sales has changed,” he said. “I’ve found that a lot of people, once they take the time to learn about the issue, are supportive.”
Yes for Fair Business’s website is fairjeffco.com. On Facebook, its page is Yes for Fair Business.