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What is a local use tax?
A local use tax is a sales tax imposed on the purchase of goods online. If approved, the local use tax rate of 1.25% will be 1% lower than the current local sales tax rate in stores.
What's the difference between a sales tax and a local use tax?
Town & Country sales tax is charged at 2.25% by local brick-and-mortar stores. A local use tax would currently be charged at 1.25% for online sales, such as Amazon. Keep in mind, sales and local use taxes CAN NOT be applied at the same time.
Don't we already pay sales taxes online?
Currently, only the state of Missouri can collect taxes from online purchases with out-of-state vendors. In 2021, the state legislature passed a new law (“Wayfair”) that allows cities to collect taxes from online purchases beginning in 2023, but only if the voters of that City approve a local use tax (proposed Prop U). When individuals make purchases at retail stores in Town & Country, they pay the sales tax that is applicable at that location. Purchases by Town & Country residents from out-of-state, online vendors go untaxed. For the City of Town & Country to collect revenues from online sales, voters would have to authorize the collection.
Do other cities have a local use tax?
Approximately half of all Missouri cities with populations of 2,000 or more already have a use tax in place. If approved by voters, Town & Country will join more than 200 Missouri cities that currently impose a use tax, including the cities of Brentwood, Clayton, Crestwood, Des Peres, Frontenac, Hazelwood, Kirkwood, Maplewood, and University City. St. Louis County does not currently levy a use tax. The County sales tax of 3.513% is charged in stores.
What happens if Proposition U passes?
The City has not levied a property tax in more than 25 years, so sales taxes are the City's primary source of revenue. However, in recent years more and more sales have shifted online. Current estimates indicate online sales represent about 15% of all purchases, and that number is expected to grow in future years. A local use tax will help ensure the City can keep a balanced budget in future years. These funds will be used to invest in City services such as police, fire, EMS, street and sidewalk repair, snow plowing, and our many parks, trails and facilities.
What happens if Proposition U fails?
The same law allowing the local use tax collection also gradually reduces another revenue source for the City - cable franchise fees. Between this and the loss of sales tax revenues as more shopping transitions online, the erosion of revenue will challenge the City to maintain current funding levels. Furthermore, our local brick-and-mortar stores and businesses that invest in the community will continue to be disadvantaged by the fact that online sales with out-of-state vendors will not have to pay local sales taxes.
Will this help our local businesses?
A local use tax would place our Town & Country businesses on an equal footing with out-of-state and online vendors. Out-of-state and online vendors do not pay a local use tax, which puts our local businesses in a competitive disadvantage.