2 on 8/4: Information on Two August 4th Ballot Issues
On August 4, 2015, two ballot issues may have the ability to effect City services. As a service to our citizens, the following information is being provided.
Questions and Answers about the Local Use Tax and Sales Tax Extension on out of state vehicle purchases
First on the ballot is a Local Use Tax.
What is a Local Use Tax?
A Local Use Tax is a tax placed on goods purchased out of state for use in state. It applies only to transactions where a sales tax was not already charged. To keep things simple and fair, local use tax is applied at the same rate as the sales tax.
Why is the Local Use Tax on the ballot?
Pettis County, the State of Missouri, and many Missouri cities already have a use tax on the books. Others, including our city, now need to pass a use tax in order to collect this revenue that we are missing out on.
Who pays the Local Use Tax?
You don’t pay the Local Use Tax unless you buy over $2,000 in merchandise a year out of state, on which no sales taxes are collected. To make it simple, since there is already a State and County Use Tax, you would not pay the City portion unless you are already paying the others. Most of the revenue generated is from out of state contractors building commercial buildings. They come into our community and construct the building but then leave and don't contribute to our community at the same level as our local businesses.
What is the proposed Local Use Tax rate for Sedalia?
The State of Missouri mandates that any Local Use Tax be applied at the same rate as the Local Sales Tax. In Sedalia, the current sales tax rate is 2.375% so the local use tax rate would also be 2.375%.
What if I already pay a sales tax on an out-of-state purchase?
No use tax is applicable if you already paid sales tax on an out-of-state purchase.
Is the Local Use Tax a double tax?
No. If sales or use taxes are charged at the time of the purchase, then no further taxes are applicable.
What goods are subject to the Local Use Tax?
Any goods purchased out of state for which no tax has been paid. Exemptions do exist for purchases for resale, manufacturing and non-profits.
Does the Local Use Tax apply to private vehicle sales?
No. The city sales tax would apply to this purchase.
How is Use Tax paid?
Businesses generally file Use Tax Returns along with their sales taxes. For individuals, the State of Missouri relies on self-reporting on a use tax return if the individual has more than $2,000 in purchases that would be subject to use taxes. For simplicity, if you are filing a use tax return now, you would add the city portion. If not, there is nothing to report.
Second on the ballot is the Sales Tax Extension on out of state vehicle purchases
Is this a new tax?
No- this is a vote to continue the current tax when a vehicle is purchased from someone other than a Missouri licensed Dealer. Because of a recent change in the Missouri law, the City is required to ask voters if the local portion of the sales taxes on out of state purchases will continue.
What happens if the issue is not approved by voters?
If citizens do not vote to extend the current tax, it will expire next year and our city will lose approximately $100,000 in revenue EVERY year.
Who pays the Local Sales Tax on out-of-state vehicle purchases?
Only those Sedalians who buy a motor vehicle, trailer, boat or outboard motor from a source other than a licensed Missouri dealer.
What is the current Local Sales Tax on out-of-state vehicle purchases?
The current rate is 2.375%.
How is the Local Sales Tax paid?
The Local Sales Tax is paid to the State License Bureau when the vehicle is licensed.
Benefits of passing both the Local Use Tax and Sales Tax on Out of State Vehicle Purchases
Why are these taxes necessary?
They provide an important source of local funding and levels the playing field for local businesses, which would otherwise be at an unfair competitive disadvantage to out-of-state business when local taxes are avoided.
How much annual revenue does our city expect to generate from the Local Use Tax and Sales Tax on out-of-state vehicle purchases?
$685,000 on the Use Tax and $100,000 in Sales Tax
What local services will the Local Use Tax and vehicle sales tax fund?
The taxes will provide funding resources for city services like street repair, police and fire protection and city improvements. One project currently under development is the intersection of W. 50 Highway and West Main Street. Because of economic growth and traffic congestion in that area, the city is looking at ways of improving traffic flow to enhance the safety and convenience of motorists.
Will the local taxes have other local benefits?
Yes! In addition to providing an important source of revenue for city services, the taxes are an important tool in leveling the playing field for local businesses. With no local use tax in place, businesses and local residents ultimately have an incentive to cross state lines to buy instead of buying locally. This also gives an unfair advantage to out of state building contractors. This costs us local jobs and sends hundreds of thousands of dollars out of our local economy.
What is the date of the election when the Use Tax and Sales Tax will be on the ballot?
These issues have been placed on the August 4th ballot.
Can I vote absentee?
Yes. Absentee votes will be accepted from June 23rd until August 3rd at 5PM. Contact County Clerk Nick LaStrada at 660-826-5000, ext 918 to obtain an absentee ballot.
Other Questions/Speaker Requests
Who can I contact for more information about the local Use Tax or Vehicle Sales Tax?
If you have other questions or would like to arrange for a speaker to present information to your group, please email email@example.com.