COLUMBIA — A use tax on Internet and out-of-state sales might be a partial solution to the declining sales tax revenue that has the city of Columbia and Boone County governments struggling to make ends meet.
A use tax is similar to a sales tax, except that it applies only to out-of-state purchases, mainly those made over the Internet. As it stands, online sales are not subject to local sales taxes, a situation city and county officials have lamented for years.
The Boone County Commission is preparing to assemble a committee that would, in part, determine whether it’s time to consider a use tax, which would have to be approved by voters before it is enacted.
“Sales tax revenues have been declining the past two years,” Presiding Commissioner Ken Pearson said. “You have disparity between the growth in property tax revenue and the decline in sales tax revenue.”
It’s still early in the process. The commission has sent letters to representatives of various cities and towns asking that they suggest people to serve on the committee.
“We’ve asked for each city to have one or two people,” Pearson said.
Use taxes must match local sales tax rates. The state of Missouri already has a use tax that matches its sales tax of 4.225 percent.
“It has to be identical,” Pearson said.
The use tax applies only to those who spend more than $2,000 on items from outside the state.
“Most of the use tax that is paid, is paid by businesses,” Pearson said.
Columbia voters have rejected a use tax twice. Records of the Boone County Clerk show that in 1996, it failed on a vote of 6,758 to 4,846, or 58 percent to 42 percent. In 1998, the margin was closer: 11,445, or 56.6 percent of voters, voted no and 8,773, or 43.4 percent, voted yes.
Officials first resurrected the use tax idea at a municipal dinner Sept. 30, and it came up again at a recent meeting between the commissioners and Columbia City Manager Bill Watkins.
“Our (Finance Advisory and Audit Committee) has been looking at additional revenues for our city, and use tax was on their list,” Watkins said. “Doing it on a county basis might make some sense if we choose to pursue it further."