Mid Rivers Newsmagazine 5-6-20

12 I NEWS I
May 6, 2020
MID RIVERS NEWSMAGAZINE
You’ve earned
your money,
but are you
owning it?
Andrew Weltz
Independent
Branch Leader
O’Fallon Independent Branch
4579 Highway K
O’Fallon, MO 63368
andrew.weltz@schwab.com
juvie.jimenez@schwab.com
(636) 486-8094
schwab.com/ofallon
It’s not a trick question. Many people
who are hands on in creating their
wealth are not as involved when
investing it. For some it’s a choice, but
for others it’s a brokerage model that
may not encourage their involvement.
At Schwab, we provide expertise and
guidance while still encouraging you
to be involved as much as you like. So
you can take ownership of your future.
Talk to us today about a more modern
approach to investing.
©2018 Charles Schwab & Co., Inc. (“Schwab”) All rights reserved. Member SIPC.
MWD103484-19 (0614-3696) ADP85382-00 (9/18)
Juvie Jimenez
Independent Branch
Financial Consultant
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 the
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-at-home orders over the
last six to eight weeks, people
are going to become even
more accustomed to purchasing items over
the internet.”
Throughout St. Charles County, local
governments have pointed toward internet
sales as a major player in the loss of
operating revenue. As such, several cities
have put use tax measures on previous ballots.
This June, only O’Fallon has a use tax
measure on its ballot. The ballot language
reads as follows:
“In order to increase funding for O’Fallon
police services and road improvements,
shall the City of O’Fallon impose a local
use tax at the same rate as the total local
sales tax rate, currently two percent [2%],
provided that if the local sales tax rate is
reduced or raised by voter approval, the
local use tax rate shall also be reduced or
raised by the same action? A use tax return
shall not be required to be filed by persons
whose purchases from out-of-state vendors
do not in total exceed two thousand dollars
in any calendar year.”
Thomas Drabelle, O’Fallon’s communications
director, explains that under the
current system, use taxes are self-reported.
That means individuals who purchase
more than $2,000 from out-of-state vendors
are obligated to report their purchases
on a separate tax return at year’s end and
remit a check for the use tax [sales tax]
only on those purchases over $2,000.
@MIDRIVERSNEWS
MIDRIVERSNEWSMAGAZINE.COM
Local municipality, state legislator
seek passage of use tax legislation
“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
“It’s complicated,” Drabelle said.
Further complicating matters are e-commerce
companies that have a nexus [physical
presence] in Missouri and already
collect sales tax. Capturing sales tax [use
tax] revenue from out-of-state sellers is the
larger concern.
Sen. Andrew Koenig [R-District 15]
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 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 need to pass legislation
in order to collect it.”
Koenig was quick to point out that passage
of SB648 would not immediately
affect municipal budgets impacted 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.