The Chesterfield City Council voted to put a use tax proposal on the April 5 ballot in 2022.
A use tax, allows municipalities and counties to impose an online sales tax on out-of-state vendors.
On June 30, Missouri Gov. Mike Parson signed into law the “Wayfair bill,” which imposes online sales tax on out-of-state vendors. The legislation allows municipalities to collect a use tax from online retailers that sell and deliver more than $100,000 in tangible goods in the state. However, the tax must be approved by the voters of those municipalities.
Chesterfield council member Tom DeCampi (Ward 4) said the idea of a use tax is “very unpopular in Ward 4.”
“I hope they come out in huge numbers to vote this down,” he said. “It’s not going to drive voters to brick and mortar; what it’s going to do is reduce the disposable income of shoppers so that they have less.”
While DeCampi labeled it a “new tax,” City Administrator Mike Geisel said it is not a new tax and simply restores the tax collecting ability that was allowed in 1992, prior to Quill Corp. vs. North Dakota. That case determined that states could not collect sales taxes from retail purchases unless the seller had a physical presence in the state.
The ruling created a loophole for online retailers that didn’t exist before, Geisel said. Then in 2017, the Supreme Court reversed that decision, which provided the opportunity to recover the sales tax.
Geisel estimates the city loses out on $3 to $4 million in sales tax revenue annually by not collecting the tax.
The ballot will contain substantially the following language:
“Shall the city of Chesterfield impose a local use tax at the same rate as the total local sales tax rate, 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?”
The vote to put the tax on the ballot was approved 7-1 with DeCampi voting against it.
The Ellisville City Council also passed an ordinance at its meeting on Oct. 6 to place use tax legislation on its April 5 ballot.
If approved, the use taxes would go into effect in January 2023.