City pushes tax in hopes of bringing in million dollar profit

3 months 3 weeks 6 days ago Monday, October 23 2017 Oct 23, 2017 Monday, October 23, 2017 10:36:00 PM CDT October 23, 2017 in News
By: Kristen Harris, KOMU 8 News
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COLUMBIA - Due to the growing population in Columbia, the city is hoping to keep up with its expenditures with a new tax. 

The use tax is similar to the sales tax, but is for out-of-state purchases. It would not apply
to purchases that total less than $2,000 in a calendar year.

Second Ward Council Member Mike Trapp said, “The use tax evens the playing field for local retailers by charging the same tax whether you buy it locally or whether you buy it online or through a catalog or through some other distance purchase from out of state.” 

Janet Thompson, Boone County associate commissioner, said the only argument against it is it's a tax.

“I don’t see it even as a new tax because it really isn’t a new tax, it’s a tax that we haven’t collected," she said. "It’s kind of like a shadow of sales tax because it exactly mirrors the sales tax, but it’s just on those sales that are happening out of state.”

Thompson said the only difference on what's being taxed is that retailers would not have a physical store in Missouri.

“Right now, I’m not paying any local sales tax. I’m not paying City of Columbia sales tax. I’m not paying Boone County sales tax or that ‘Use Tax’ which is because they don’t have a physical presence—that’s the difference. I’m not paying that local tax,” she said. 

The use tax would be the same as the sales tax, currently 2 percent. If the local sales tax rate is reduced or raised by voter approval, the local use tax rate would be reduced or raised by the same action.

Trapp said, “Considering that we have about 2 percent more people in the city and the inflation is about 2 percent, that’s a real scary number. Our revenue is not keeping up with growth or inflation. If we’re going to pay for basic services, then we need to find ways to make sure that we’re collecting what we used to collect in sales tax. More and more people are making online purchases and sales tax is not collecting what it used it.” 

Columbia is anticipating close to $1 million per year in new revenue from the tax. The city plans to use some of this money to hire three new fire fighters.

Boone County is also pushing its residents to vote for the use tax under Proposition U. The tax is exactly the same as the one for the city, it just affects different areas. Both taxes for Boone County would be 1.75 percent.

Boone County is anticipating about $3 million a year in new revenue. The county would allocate these funds towards services, law enforcement, roads and bridges. 

“The importance is, it goes to services. It funds central services. It funds law enforcement. It funds roads and bridges. It funds all of the services that are important for our constituents,” Thompson said. 

She said when sales taxes were first developed, there was no such thing as online sales.

"There was no such thing," she said. "The internet just got started in like the early 1980s. It was just a little baby in the 1980s. And so we saw, you know, most sales were still happening locally. A little catalog sales, but not much. Now that’s exploded and almost half of the sales are happening online.”

The city of Ashland and the town of Harrisburg will also have use taxes on its ballots.

The election will be Nov. 7.

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