Use Tax
MORE THAN 305 MISSOURI CITIES HAVE A USE TAX
A Use Tax Funds Community Services & Generates Local Revenue. It Is NOT A Double Tax!
The Hallsville Board of Aldermen voted to call a special election on the question of whether to impose a local use tax. The election will take place Tuesday, November 5, 2024.
A use tax would ensure that purchases from online vendors located outside of the state are subject to the same local tax rates as those purchases made from Hallsville vendors.
It would also help the City maintain its revenue while continuing to provide the services our residents expect plus more.
Official ballot language
PROPOSITION U
Shall the City of Hallsville 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?
☐ YES
☐ NO
If you are in favor of the question, place an “X” in the box opposite “YES”. If you are opposed to the question, place an “X” in the box opposite “NO”.
What is a use tax?
A use tax is a local tax applied to goods purchased from out-of-state sources, primarily through online transactions, that are delivered to and utilized within the City of Hallsville.
Currently, Hallsville imposes a 2.625% local tax on all goods and services acquired from local businesses. However, this does not extend to purchases made online from vendors located outside Missouri. For instance, when a consumer buys a retail item from a store in Hallsville, the vendor collects both state and local sales taxes. Conversely, if the same consumer opts to purchase the item online from an out-of-state vendor, the vendor is not obligated to collect the local sales tax.
If voters approve Proposition U on November 5, 2024, a 2.625% local use tax would be instituted on goods and services acquired from out-of-state vendors. The revenue generated from this use tax would be allocated in the same manner as the city's local sales tax, funding various initiatives from the General Fund. These funds cover the cost of the utility maintenance and upkeep of the grounds at the Morgenthaler House and Mercantile Building & Museum and cover a large portion of the utility cost there. They are used for the upkeep of the community center and park, street repairs, Public Works department, vehicles and equipment repairs, and public safety.
The use tax rate would align precisely with the local sales tax rate for residents, ensuring that individuals will not be subject to both use and sales tax on the same transaction.
What would a use tax mean for Hallsville residents and businesses?
A use tax would eliminate the disparity in tax rates collected by local and out-of-state sellers by imposing the same rate on all sellers.
With no local use tax in place, consumers have an incentive to purchase goods and services from out-of-state vendors instead of buying locally.
If voters approve the Prop U ballot measure, online, out-of-state purchases would be taxed at the exact same rate as in-state purchases.
Funding sources that better reflect consumer behavior
Online shopping has become much more prominent in recent years, and the general trend is that in-store shopping is decreasing steadily.
Nationwide, online sales rose 30% during the pandemic and in 2023 represented more than 15.4% of total retail sales.
With the rise in e-commerce, the City is seeing a decline in sales tax growth. To keep pace with this trend, the City must modernize its revenue sources to continue to provide the essential services.
The City relies heavily on revenues from local sales tax to fund basic services, such as parks, road maintenance, and public safety.
Because the City doesn’t have a use tax in place, Hallsville has missed out on approximately $400 thousand in tax revenue due to online shopping over the last five years.
Paid for by the City of Hallsville, Missouri. Kenyetta Ridgway-Sample, City Administrator |
202 Hwy 124-E., P.O. Box 170, Hallsville, MO 65255
Frequently Asked Questions
I already pay sales tax, is this the same thing?
No. The sales tax applies to purchases made at retail within Missouri, while the use tax applies to purchases made from out-of-state vendors. Purchases cannot fall into both groups and therefore a purchase would not be taxed twice.
It Is NOT A Double Tax!
What is the use tax rate?
The use tax is imposed at the same rate as the total local sales tax rate, currently two percent (2.625%). 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.
Why is this important to City of Hallsville’s residents?
With no local use tax in place, consumers have an incentive to purchase items from out-of-state vendors instead of buying locally. This costs the city local jobs and tax revenue because millions of dollars are sent out of our state and local economy.
The City of Hallsville needs to maintain this revenue stream for vital City services such as:
- The Morgenthaler House and Mercantile Building & Museum: utility maintenance, upkeep of the grounds, and covering a large portion of the utility cost
- Community Center
- Park
- Streets
- Public Works
- Vehicles & Equipment repairs
- Public Safety
- Sidewalks
Do other Missouri cities have a use tax?
Yes. Approximately half of all Missouri cities with populations of 2,000 or more already have a use tax in place. The City of Hallsville does not. Large cities with a use tax are Kansas City, St. Louis and Springfield. Cities in the mid-Missouri area with a use tax are Columbia, Boonville, Fayette, Fulton, Holts Summit, Mexico, Moberly and Sturgeon.
Will the use tax apply to online purchases?
It depends on where the transaction occurs. If goods are purchased from a vendor located in Missouri, sales tax is applied at the rate applicable to the vendor’s location. If goods are purchased from a vendor outside of Missouri the use tax applies.