Five lake area entities are seeking to institute a use tax at the same rate as their current sales tax.
The cities of Osage Beach, Camdenton and Laurie as well as Camden and Morgan counties are looking to assess tax on any out-of-state purchase that totals more than $2,000 of tangible personal property.
Under Chapter 144 of state statute on sales and use tax, tangible personal property includes motor vehicles, trailers, motorcycles, mopeds, motortricycles, boats and outboard motors. Use tax can also be collected on out of state sales of electricity or electrical current, water and gas, natural or artificial, to domestic, commercial or industrial consumers.
The use tax can apply to a purchase only where no sales tax is applied. If sales tax is collected, the use tax is not collected, according to Osage Beach City Attorney Ed Rucker.
The decision in Street v. Director of Revenue in 2012 changed the existing practice by prohibiting collection of a local sales tax on a vehicle purchased from an out-of-state vendor. Collections were ended in March 2012 as a result.
The Department of Revenue will collect the use taxes, if adopted, when this type of purchase is made, and then the funds will be remitted to the cities and counties. At registration, vehicle or boat owners will be charged sales tax or use tax, but not both.
The proposed use tax would allow the cities and counties to replace revenue from the tax that was collected on out-of-state and individual-to-individual sales of vehicles, boats and other large ticket items prior to the Missouri Supreme Court decision last year.
In Camden County, lost revenue is believed to total up to at least $300,000, which helped support the road and bridge fund.
Osage Beach officials have estimated a loss of around $33,000 in revenue, and Laurie approximately $4,000. In Morgan County, the lost revenue is believed to total about $86,000 a year.
Morgan County officials said small budget cuts across the board would be likely to compensate if the use tax does not pass.
The cities are particularly vulnerable to changes in sales tax rates. These lake area municipalities rely solely on sales tax funding. They do not levy any property tax.
A simple majority in each political subdivision is required for a use tax to pass.
Officials have also said that the loss of sales tax on these out-of-state items could potentially hurt the local economy. Buyers may make more of these purchases out of state - instead of with local businesses - in order to pay less by avoiding sales tax.
The Camden County ballot question states, "The purpose of the proposal is to eliminate the current sales tax advantage that non-Missouri vendors have over Missouri vendors."
A ballot issue in the City of Laurie for a use tax in August 2012 failed to pass, but it is the first time on the ballot for the use tax in the other entities.