Yes, itís getting close---time
to VOTE! We have heard lots of
reasons on why we need to go to the polls, i.e., this is the most important
election since-------. Yes, all
elections are important. Campaigning
by the parties for their respective candidates continues and seems to develop a
new revelation every week or two. Often
this frequency of activity leaves little time for a review and understanding of
other ballot proposals. So this
monthís corner is devoted to an explanation of the Use Tax proposal on the
November ballot. What is it, why
are we asked to approve it, and whatís the money for?
What is a use tax?
A use tax is nearly identical to
a sales tax but applies to out-of-state purchases. These out-of-state purchases are exempt from county sales tax
unless voters approve taxing all purchases in the same manner.
When was the use tax created?
The state use tax was initially enacted in 1959 and is
collected at the same rate as the state sales tax on applicable items.
What about a St. Louis County use tax?
Missouri state law requires the
county-wide use tax to be at the same rate as the county sales tax, now 1.85%
(August 2008). The use tax
automatically changes if county sales tax rates are changed.
Currently, St. Charles County and the City of St. Louis have a county use
tax. St. Louis County does not.
Who typically pays the use tax?
Businesses. The majority of use
tax is collected when a purchaser buys goods from a vendor located in another
state. For practical purposes, much
of the tax is paid by businesses. These
sales may include items like steel for a new building, office furniture, some
equipment. A vendor may collect the
tax from any buyer, but if it is not collected, citizens are on an honor system
and the use tax exempts the first $2,000 in purchases from filing.
What issues are involved for a St.
Louis County-wide use tax?
The county use tax (same as
sales tax of 1.85%) would be added to the state use tax so it is not much of a
change. Out of state exempt
purchases would become taxable and the loophole that hurts our local businesses
would be closed. It is estimated
that about 10% of all sales in St. Louis County are from out-of-state.
How much does the use tax generate?
It is difficult to estimate
potential revenue from the use tax but some have projected a county-wide figure
of about $30 million. State
use tax (4.225%) collected was $342,173,361.25 in FY 05, $370,905,841.75 in
FY 06 and $390,510,180.39 in FY 07, based on a report ran from the MITS
(Missouri Integrated Tax System) in 2008.
St. Charles County voters passed
the tax several years ago for its new county park system and it generated $4.3M
in 2004, $6.6 in 2006 and $7 in 2007. The
St. Charles County local rate is 1.675.
Where does the money go?
The state statute calls for the
funds to be distributed as follows:
The greatest and most immediate need concerns public safety.
The county has a federal mandate requiring a new communication system for
all emergency agencies. Did you know most police, fire and ambulance providers use
separate radio frequencies and cannot talk to each other.
Also, most are limited by distance from their base tower.
Washington D.C. changed to a new interoperable system in the late
1980ís. When the terrorist attach
on the Pentagon happened in 2001, the system received good marks and is credited
with saving lives. In the Kirkwood
disaster, first responders could not communicate well.
The new radio system is to be in operation in 2013.
The county has completed phase I of its plan and is now proceeding with
bid specification to meet the 2013 date, however, no money is available.
Monies from this tax would be used to build and maintain this system,
creating jobs also.
17% to St. Louis Countyís general revenue. I havenít made a detailed review of county spending but the
situation for all St. Louis County governmental entities is not a lot different
on the revenue side Ė sales taxes are down as are most taxes based on
33% for cities is estimated to be about $20 per person.
Thatís approximately $50,000 for Clarkson Valley.
We have discussed your budget situation below and our current projections
indicate additional revenue or reductions in some services will be a reality in
the next 2 Ė 3 years. This
revenue could make a difference as to when such a decision will be necessary.
I hope I have shed some light on this important proposal.
I attempted to state the facts used for the proposal and usage of the
dollars generated. This proposal is
a way of solving the communication system money needs and other less critical
needs of the county and city governments. There
may be other ways not yet explored Ė Itís your decision.
Thatís why itís so important you vote.
special thanks goes to the St. Louis County Municipal League Staff for their
assistance in preparation of this article.