City Use Tax Passes
By CATHERINE STORTZ RIPLEY
November 4, 2015
Just over 6 percent of
Chillicothe's registered voters cast ballots in Tuesday's election, approving the proposed use
tax for the city and defeating the proposal to discontinue collection of sales tax on the titling of motor vehicles. In all,
356 of the 5,358 registered voters voted in the election. Chillicothe Mayor Chuck Haney said that although the voter
turnout was extremely low, he was pleased with the outcome of both measures. Passage of the
use tax measure means that Chillicothe will eliminate the current sales tax advantage that non-Missouri vendors have over Missouri
vendors and place a local use tax on out-of-state purchases. The state of Missouri and Livingston County already
have a use tax in place. Defeat of the vehicle sales tax measure means that Chillicothe will continue collecting local
sales tax on the titling of motor vehicles, trailers, boats and outboard motors that were purchased from a source
other than a licensed Missouri dealer. "I am really
pleased," Haney said following the posting of results in the lobby
of the Livingston County Courthouse. "I was concerned because we were putting two proposals on the ballot, urging
people to vote yes on one and no on the other," he said. Nothing else was on the ballots,
and it was difficult to create an enthusiasm for voters to go to the polls, the mayor stated.
"The people who did take the time to get out and vote and make these issues happen for the benefit of the city, our street
program, and our car dealers here in Chillicothe, made this a huge day at the
polls." The use tax passed 209-146, and passed in all precincts but the combined
polling place for 3rd and 4th wards, where there were 55
"Yes" votes and 56 "No" votes.
vehicle sales tax measure was defeated in all voting precincts with 237
"No" votes and 118 "Yes" votes. Passage of the city use tax
will accelerate Chillicothe's street improvement program and is expected to pump an estimated
$300,000 annually into an already-stretched street fund. The city has 80 miles of streets. When Chillicothe City Council
members decided to place the use tax measure on the ballot, they unanimously agreed that the
city's streets are in need of improvements and that all funds collected through the use tax would go for street improvements only. The city of
Chillicothe proposed a use tax in August 2008, but it was defeated with 53 percent of the voters opposing the
measure. At the time, the city had not identified how revenues from the use tax would be used. Livingston County
proposed a use tax in August 2006 and county voters approved the measure with approximately 68 percent of the
votes cast. As for the vehicle tax, the measure was placed on the ballot as the result of legislative action which gave
municipalities the option of placing the vehicle tax measure on their ballots no later than November 2016. Missouri
legislators passed a bill requiring every city in the state that did not have a use tax in place before August 29, 2013,
to have an election and place on the ballot the issue of whether or not to continue the local sales tax on purchases of
vehicles, trailers, boats and outboard motors purchased from anybody except a licensed Missouri dealer. Passage of
the measure means that, essentially, there will be no changes to the way vehicles are purchased, according to City
Attorney Robert Cowherd. If voters decided to repeal the local vehicle
sales tax, the tax would go away. Failure to pass this ballot measure would have meant that the city would be able to
collect sales taxes only on vehicles purchased from Missouri dealers.
"It means a lot in the fact that the council unanimously supported both these
proposals to put them on the ballot," the mayor said.
Issues on City Ballot
Catherine Stortz Ripley
August 12, 2015
Chillicothe voters this November will decide two issues: whether to impose a local use tax for purchases made out of
state and whether to continue the collection of a vehicle sales tax. City Council members were unanimous in their
decisions this week to place both matters before city voters.
In granting their approval for the use tax, the council passed an ordinance stipulating that the revenues generated
from that tax, if passed, would be fully dedicated for city streets. The ordinance states that
"100 percent of the funds would be used for street construction, repairs and maintenance, including construction and repairs to related curbs, drains and sidewalks. No part of the funds will be used for purchase of
equipment." The council was in full agreement that the city's street fund is under-funded and could benefit from this tax. The state of Missouri, as well as many
Missouri cities and counties, currently have use taxes in place. The statewide use tax is 4.225 percent. Livingston
County voters approved a use tax for the county in 2006. The
county's use tax is 0.75 percent, which is the same as the
county's current sales tax. The city's proposed use tax is 2.25 percent, the same as the
city's current sales tax. The use tax is similar to a sales tax in that it applies to the same type of items that if purchased at retail within the state of Missouri would be taxed under the sales tax. However, the use tax is imposed on purchases made by Missouri residents from out-of-state vendors. The amount of use tax due on a transaction depends on the local and state use tax rates in effect at the Missouri location where the tangible personal property is stored, used or consumed. Local use taxes are distributed in the same manner as sales taxes.
Chillicothe's sales tax is 2.25 percent and its use tax, if approved, is expected to generate around $294,000 annually in revenue for the city.
Council members, during their regular meeting Monday evening at City Hall,
approved the ballot language to read: "Shall the city of Chillicothe in an attempt to eliminate the current sales tax advantage that Non-Missouri vendors have over Missouri vendors, place a local use tax on Out-of-State purchases?
This would be at the same rate as the local sales tax rate, currently 2.25 percent. If any local sales tax rate is repealed, reduced or raised by voter approval, the local use tax rate shall also be reduced or raised by the same action. Use tax shall not be required to be paid by persons whose purchases from out-of-state vendors do not exceed two thousand dollars in any calendar
"If you buy it locally,
you're going to pay the 2.25 percent local sales tax; if you buy it not locally, this means you would pay the same use tax if you exceed the $2,000 in a
year," explained Robert Cowherd, the city's contracted attorney. He said that the use tax generally applies to certain businesses; however, there are exemptions. He noted that businesses that currently do no pay a state use tax would not pay a local use tax, either. He noted that the use tax would not affect many individuals, since it is imposed for individuals spending more than $2,000 from out-of-state vendors.
"Missouri doesn't have a way to audit you, so it's more like a
Scout's honor type tax," Cowherd said. "You're supposed to submit it, but they really
don't have any way to enforce it."
In addition to the use tax, Chillicothe voters in November will be voting on whether to discontinue application and collection of the local sales tax dealing with vehicles.
The approved ballot language: "Shall the City of Chillicothe,
Missouri, discontinue applying and collecting the local sales tax on the titling of motor vehicles, trailers, boats and outboard motors that were purchased from a source other than a licensed Missouri dealer?
Approval of this measure will result in a reduction of local revenue to provide for vital services for City of Chillicothe, Missouri, and it will place Missouri dealers of motor vehicles, outboard motors, boats, and trailers at a competitive disadvantage to non-Missouri dealers of motor vehicles, outboard motors, boats and
This is a tax that currently is in effect, Cowherd said. If voters repeal the issue, the only time buyers would pay local sales tax is if they purchased vehicles from Missouri dealers. They would not pay the tax if they purchased vehicles from individuals or from an out-of-state dealer.
"Chillicothe has three large dealerships in town," Cowherd said, noting that if the measure was repealed, it would set up an unfair set of circumstances against the dealerships. The two city ballot issues can be confusing for voters in November, the attorney noted.
"The city would want the voters to vote 'yes' on the use tax so that you have more money for streets, and
you'd want to vote 'no' on repealing this vehicle sales tax because if you vote
'yes' you're going to lose all the tax and that's going to be a pretty substantial hit for
the city so you're going to have to cut services across the board in a lot of
Issues on City Ballot in November
By CATHERINE STORTZ RIPLEY
July 28, 2015
Chillicothe voters will be deciding two city issues in November
- whether to implement a use tax and whether to continue the collection of a vehicle sales tax. During a workshop meeting Monday evening,
July 27, at City Hall, Chillicothe City Council members unanimously agreed to place both issues on this
fall's ballot. A formal vote to place the issues on the ballot is expected to take place during the
council's Aug. 10 meeting so that notification can be given to the county clerk prior to the Aug. 25 deadline. The use tax is similar to a sales tax in that it applies to the same type of items that if purchased at Missouri retailers they would be taxed under the sales tax. The same exemptions also apply such as agricultural purchases and equipment purchases by manufacturers. However, the use tax is imposed on purchases by Missouri residents from out-of-state vendors. Currently, Chillicothe residents pay a statewide use tax and a Livingston County use tax on such purchases, but
don't pay a city use tax on purchases out of state. Although difficult to predict revenues if the measure passes, a rough estimate can be made by looking at the dollar amount being collected by the county, according to Chillicothe Auditor Theresa Kelly. Livingston
County's use tax collection for 2014 was approximately $98,000, based on the county tax rate of 0.750 percent. Therefore, if the city had the use tax in place in 2014, the city could have received approximately $294,000, based on its tax rate of 2.250 percent. Much of the
county's use tax revenue is generated within the Chillicothe city limits; however, not all is, making it difficult to estimate how much revenue would come into the city if the use tax measure was in place. Council members discussed how revenues would be used if the use tax is implemented and agreed that the proposal would have better chances of passing if the funds were designated for streets only. Councilman-at-Large David Moore stated that $200,000 annually would not fix the streets, but the council agreed that such funds would help maintain them. It is expected that the council will approve ballot language specifying that all the tax revenues from the use tax would be designated for streets only. The other ballot measure proposed for November is the continuation of a local sales tax that is currently collected on vehicles purchased from sources other than licensed Missouri dealers, such as individuals or out-of-state dealers. Municipalities throughout the state have the option of placing the vehicle tax measure on their ballots no later than November 2016, following recent legislative action. The legislature passed bill requiring every city in the state that did not have a use tax in place before August 29, 2013, to have an election and to place on the ballot the issue of whether or not to continue the local sales tax on purchases of vehicles, trailers, boats and outboard motors purchased from anybody except a licensed Missouri dealer. If the measure is approved, there essentially would be no changes to the way vehicles are purchased. If the local vehicle sales tax is repealed, the tax would go away. Failure to pass this ballot measure would mean that the city would be able to collect sales taxes only on vehicles purchased from Missouri dealers. Discussion of these ballot measures took place during the
council's workshop meeting in the conference room at City Hall.
Use Tax, Vehicle Sales Tax Being Considered
By CATHERINE STORTZ RIPLEY
June 30, 2015
Chillicothe voters will likely see a use tax ballot issue in an upcoming election as well as a ballot question dealing with local sales taxes on vehicles purchased other than from Missouri dealers. City council members discussed both topics during a workshop meeting Monday evening in the conference room at City Hall. No decisions were made as to whether the issues will be put on a ballot. The use tax is similar to a sales tax in that it applies to the same type of items that if purchased at Missouri retailers they would be taxed under the sales tax. The same exemptions also apply such as agricultural purchases and equipment purchases by manufacturers. However, the use tax is imposed on purchases made by Missouri residents from out-of-state vendors. Currently, Chillicothe residents pay a statewide use tax and a Livingston County use tax on such purchases, but
don't pay a city use tax on purchases out of state. "You pay a sales tax when you purchase from a merchant in the state of
Missouri," City Attorney Robert Cowherd explained during the workshop.
"You pay a state sales tax, county sales tax, and in most cities, a city sales tax. If you buy something from out-of-state, you
don't pay sales tax on that because the sale did not occur in the state of Missouri. You pay a use tax because you are using it in the state of
Missouri." An estimated 200 Missouri cities currently impose local use taxes. Based on use tax revenues in Livingston County, it is estimated that the city would receive around $200,000 annually if a city use tax was imposed. Qualifying items would be taxed at the same rate as the city sales tax if it was imposed. The attorney said that an exemption exists for purchases up to $2,000 per person.
"You don't pay any use tax on the first $2,000 in purchases out-of-state per
person," he said. "As a practical matter, the only people who pay this are businesses. The reason is that the state of Missouri
doesn't audit individual returns." The use tax is sometimes incorrectly referred to as an internet sales tax. However, Cowherd stated, the federal government has said that there are no taxes on out-of-state internet sales unless the seller has a presence in the state of Missouri.
"How the use tax will apply to internet sales, that's really out of our
hands," Cowherd said. "We have no control over that."
The other possible ballot issue being considered is the continuation of a local sales tax that is currently collected on vehicles purchased from sources other than licensed Missouri dealers, such as individuals or out-of-state dealers. The city currently collects sales taxes on vehicles that are registered by people who live in the city limits, regardless of where they purchase the vehicles
- whether from a dealer or a private individual. The Missouri legislature passed a bill requiring every city in the state that did not have a use tax in place before August 29, 2013, to have an election and to place on the ballot the issue of whether or not to repeal the local sales tax on purchases of vehicles, trailers, boats and outboard motors purchased from anybody except a licensed Missouri dealer. Cowherd stated that because of the state statute, Chillicothe needs to have an election on that issue.
"What will happen if you don't do it is that if you buy a car from a local dealer
you'll pay a sales tax on that," Cowherd said. "If you go buy an identical vehicle from your neighbor or an out-of-state dealer, you would not pay local sales
tax." "If you don't have an election, it is automatically repealed on those purchases not from Missouri
dealers," he said. "It's hard to figure out exactly what impact that would have, but it will have some impact because there are a lot of private sales. Not only out-of-state sales, but also local private sales would be excluded from sales taxes. It really puts the Missouri car dealers in a very substantial
disadvantage." The vehicle sales tax measure could be voted on as early as November
2015 and needs to be on the ballot no later than November 2016.
"We need to pass an ordinance to put that on the ballot because the legislature said,
'you shall do that,'" Cowherd said. Failure to pass this ballot measure would mean that the city would be able to collect sales taxes only on vehicles purchased from Missouri dealers.
"If I was a Missouri dealer, I'd say it is a matter of fairness and you ought to pass
this," Cowherd said.