West Newsmagazine 5-6-20

12 I NEWS I
May 6, 2020
WEST NEWSMAGAZINE
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By KATE UPTERGROVE
In its simplest form, a use tax is sales tax
collected by an e-commerce vendor and
distributed to the municipality in which the
purchased item will be used. Use tax revenue
functions exactly the same way sales
tax revenue does – it helps municipalities
provide services to residents.
On April 22, the Missouri Municipal
League [MML] predicted that “failure to
pass an e-commerce use tax could bankrupt
local governments in wake of COVID-19
pandemic.”
“It’s not a new tax,” said Pat Kelly, executive
director of the Municipal League of
Metro St. Louis. “It’s just one – already
approved by voters – that we
[as a state] are failing to collect.
That’s bad for brick and
mortar stores because internet
sellers are not collecting
local sales taxes and that’s
a competitive disadvantage.
But I think one of the bigger
concerns going forward is
that because of the stay-athome
orders over the last six
to eight weeks, people are
going to become even more
accustomed to purchasing
items over the internet.”
In its press statement, the MML quoted
Callaway County Presiding Commissioner
Gary Jungermann as saying, “The large
online retailers that don’t collect and remit
use taxes on the vast majority of their sales
now represent the lion’s share of economic
activity in the state and are starving municipalities
and counties of crucial revenue.”
That sentiment has been echoed throughout
West County as local governments have
pointed toward internet sales as a major
player in the loss of operating revenue. It is
important to note that e-commerce companies
that have a nexus [physical presence]
in Missouri already collect sales tax. Capturing
sales tax [use tax] revenue from outof-state
sellers is the larger concern.
Sen. Andrew Koenig [R-Ballwin] currently
has a bill in the Senate [SB 648]
that, if passed, could help to address that
concern.
The bill was the last item being debated
on the Senate floor prior to the COVID-19
closures. Its goal, according to Koenig’s
policy director, Daniel Wilhelm, is to level
the playing field so that whether someone
purchases something online or at a brick
@WESTNEWSMAG
WESTNEWSMAGAZINE.COM
Local politician, state
municipal league push for
passage of use tax legislation
and mortar location, the local government
receives the same approved sales tax,
which they can use to pay for city expenditures
as allowed by voters.
Missouri is one of only two states in the
nation that does not collect local sales [use]
taxes on internet purchases.
“In most states, they just collect sales tax
but in Missouri we have a use tax system
that’s built into our tax code,” Kelly
explained. “So we need to pass legislation
at the state level to start capturing the internet
sales tax and local municipalities or
taxing districts will need to pass legislation
in order to collect it. So it is a little more
complicated in Missouri because of the use
tax system but at the end of the day it goes
“Under the current system we create
an incentive to purchase from
non-Missouri businesses and that’s
not an incentive that we want.”
-SEN. ANDREW KOENIG
back to the voters to approve the collection
of that tax.”
Koenig was quick to point out that the
passage of SB648 would not immediately
affect municipal budgets affected by
COVID-19.
“If passed, it has an effective date of Jan.
1, 2022,” he said. “[But] it is good policy
because under the current system we create
an incentive to purchase from non-Missouri
businesses and that’s not an incentive
that we want.”
Additionally, Koenig pointed out that
his bill is designed to “offset any increased
revenue to the state with an income tax cut
so that the bill is revenue neutral.”
“My bill also has sales tax caps in it that
would prevent cities raising sales tax above
a specified level, which the state Municipal
League is in agreement with,” Koenig said.
At the local level, Ellisville Mayor Mike
Roemerman offer this advice: “When your
municipality comes to you to pass use tax
legislation, ask questions if you’re unsure
but just know that this is the only way we’ll
ever collect any of this internet sales tax
revenue that we’re missing right now. And
until then, shop local.”