Advocates in Blue Springs and Independence are pressing their case for a use tax – applying local sales taxes to internet sales – and are stressing it as a matter of fairness for local businesses.
“We’re hopeful,” says Blue Springs Mayor Carson Ross.
Voters in both cities go to the polls April 3. It’s the only ballot issue in either city (Independence also has a City Council race). Polls are open from 6 a.m. to 7 p.m.
Advocates of the change say this essentially closes a loophole.
“Every time you see a FedEx truck … or a UPS truck on our streets, that product is not being taxed,” Ross said.
A purchase at the mall comes with city, county and state sales taxes – a total of 7.85 cents on the dollar in Independence and 8.6 cents in Blue Springs. That same purchase online has been sales-tax-free until recently, when Missouri began collecting its portion of sales taxes. Local governments have to get voter approval, and about 130 Missouri cities have done so.
“The loophole creates an unfair advantage for sellers out of state,” said Tom Waters, a business owner on the Square and one of the Chamber of Commerce leaders promoting the ballot issue.
Cities have long said the lack of a use tax hurts in two ways. First, it puts more pressure on local businesses that create jobs and growth. According to the state of Missouri, retailing and restaurants account for 38,000 jobs in Jackson County – one job out of eight.
Second, it hurts city finances – roughly $400,000 a year in Blue Springs and $1 million in Independence.
“We think that’s a pretty conservative but realistic projection,” said Independence Mayor Eileen Weir.
Weir said approving the use tax is a way to support what the voters have intended over the years in the various local taxes they have approved for services from parks to cops.
“The citizens have already said that level of tax is the fair level,” added Doug Cowan, president and CEO of the Community Services League and a member of the Independence group promoting the ballot issue.
Advocates said their biggest obstacle is that the issue is confusing but that most people they talk with sort it out quickly with a minute of explanation. The most common question, Waters said, is whether a buyer would pay both the sales tax and the use tax. The answer is no. It’s one or the other.
“Will we be double-taxed? Absolutely not,” Waters said.
Mayor Weir added, “We’re not out to change people’s buying habits. This is just the world we live in.”
Where it goes
Implementation, if the voters go along, is simple. The state collects the money just as it does all sales taxes and then sends cities their share.
The state of Missouri is already collecting its 4.225 percent sales tax from online sales. Cities applying their local sales to online sales, by law, have to do that the same as with brick-and-mortar sales.
In Independence, that means a dollar spent for a hammer from Amazon would generate the same city taxes – 2.25 cents – as a dollar spent at a hardware store. In both cases, that’s one cent for the city’s general fund, a half-cent earmarked for streets, a quarter-cent each for parks and stormwater control, and an eight-cent each for police and fire.
It’s the same with the 2.5 percent local rate in Blue Springs – one cent for the general fund and a half-cent each for parks, public safety and transportation.
(The various Jackson County taxes – general services, the zoo, the stadiums, anti-violence efforts, and children’s services – are unaffected by the April 3 vote. The county has no use tax.)
Advocates have been making presentations around town, have put up billboards and plan to have mailers – probably one in Blue Springs and as many as five in Independence.
“We’re going to try to do one targeted mailer,” Ross said.
The mayor conceded that the issue is complex and said Congress should settle this issue for the whole country.
“That’s where it really needs to be done – the federal level – but they haven’t had the courage to do it,” he said.