he idea of a use tax is being proposed at Parkville.
If approved by voters, the use tax would apply to out-of-state and online purchases “and is only collected when the local sales taxes are not,” Joe Parente, city administrator, says in a report to the Parkville Board of Aldermen.
Previously, Parkville voters have defeated a use tax proposal. In 2013, a proposed use tax was narrowly defeated at Parkville, with 387 opposed to 377 in favor.
Voters in Platte City approved a use tax in the summer of 2020, with the City of Platte City winning approval by a margin of only four votes in an election conducted last June. Final tally in Platte City was 206 in favor to 202 opposed.
This week, Parkville aldermen were set to discuss the idea of putting the sales tax question on the ballot for an election in August. Discussion was set to take place at a meeting Tuesday night, after The Landmark had gone to press with this edition.
If approved by Parkville voters, the use tax will subject all retail sales–such as in-state, out-of-state and online purchases–to the same tax rate.
One estimate provided by the city shows about $185,000 per year would be generated for city coffers with the use tax.
“Without a use tax, online sellers have an advantage because it makes their products cheaper to purchase. This is particularly true when a major organization or business purchases big-ticket equipment and furnishings, such as computers, furniture, supplies, etc.,” Parente says in his written report to aldermen.
Parente says a local use tax “helps local businesses and places them on equal footing with out-of-state vendors. Local retailers in Parkville collect sales taxes, but many out-of-state retailers do not,” he said.
“Out-of-state vendors currently avoid local taxes, putting local businesses at a competitive disadvantage. 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,” Parente remarked.
The City of Parkville currently levies local sales taxes at two percent. The use tax would be at the same rate of two percent.
“A local use tax requires the same tax rate to be charged on purchases made from businesses located outside Missouri as charged by businesses located in the city, eliminating an inequity between in-state and out-of-state businesses that provides a competitive advantage for out-of-state businesses,” Parente said. “This proposal will not increase or change the local sales tax–it will continue to be two percent.”
The city administrator mentioned the pandemic has affected collection of some sales taxes.
“With the pandemic, online shopping has increased, including buying groceries, household supplies and other items typically purchased at a local store. These items now bought online through the internet are delivered directly to homes, bypassing local businesses,” Parente wrote in his report to aldermen.
The city administrator also remarked that the use tax would allow Parkville to capture sales taxes from out of state retailers who profit from products sold within the city.
“These out-of-state retailers send delivery trucks across our roads, which require street maintenance, and increase police calls that result in the police department responding to incidents, including the theft of delivered packages,” Parente said.
“The use tax will also preserve financial stability for government services. As more and more retail sales shift to out-of-state and online purchases, imposing the local use tax will help avoid revenue slippage from sales being diverted to online purchases and ensure the city is able to continue providing the same level of municipal services, such as street repairs, snow removal, police services and continued maintenance to our parks and facilities,” Parente says in his written report.
According to the proposed ballot language for an Aug. 3 vote, “use tax shall not be required to be paid by persons whose purchases from out-of-state vendors do not exceed in total more than $2,000 in any calendar year.”