The Columbia City Council on Monday night unanimously approved an addition to the April 5 ballot, putting before voters the decision whether to pass a local use tax impacting online purchases.
The measure would impose the same amount as the current local sales tax (2%) on purchases made outside of city limits of taxable items to be used, stored or consumed within city limits and on which no local tax was collected, according to a city memo.
A purchase is never subject to both a local use tax and a local sales tax.
"The use tax will level the playing field for our local brick-and-mortar businesses as they continue to compete even more with online businesses," said Matt McCormick, president of the Columbia Chamber of Commerce. "The placement of this measure on the April ballot will create a more equitable environment for businesses in the City of Columbia."
The use tax's purpose is to protect Columbia businesses from unfair competition against internet-based vendors outside of city limits that are not required to collect local sales tax on the purchase price, according to the city memo.
A use tax would help ensure that all residents are helping fund local programs and services, regardless of the location of their purchase, per the memo.
If passed, the tax would not affect purchases made within Columbia city limits.
"As we've seen, not just during the pandemic but prior to that as more people buy products online, they get a tax advantage that disadvantages local mom-and-pop retailers," Mayor Brian Treece said in support of the tax.
Based on an example in the memo, if a person were to purchase an item from a business within city limits, the purchase would be subject to both local and state sales taxes. However, currently, if the same product is purchased outside of city limits or from an online business, the vendor is not required to collect and remit local sales taxes.
If passed, city staff predicts the tax would generate revenue equivalent to 9% of sales tax revenue. In the event that the local sales tax is raised, the use tax rate would be raised to match that amount.
The use tax was previously rejected by Columbia voters in November 2017.
The council, per Treece's request, plans to make clear its intent for how funds from the use tax would be used in hopes of incentivizing voters to pass the bill, much like Parks and Recreation did with the renewal of its tax.
Missouri already has a state use tax in place, but only requires citizens to file use taxes when more than $2,000 worth of goods are purchased outside of the state.
This article originally appeared on Columbia Daily Tribune: Columbia, MO voters to decide whether to add local use tax in April