Proposed USE Tax = Mail order and Internet Sales TAX

CITY OF RAYTOWN Request for Board Action​​ 

Date: August 12, 2021 Bill No.: 6579-21 To: Mayor and Board of Aldermen Section No.: III-A-9 From: Damon Hodges, City Administrator​​ 

Department Head Approval:​​ 

Finance Director Approval: ​​​​ ________________________​​ (only id funding is requested)

City Administrator Approval:​​ 

Action Requested:​​ Request approval of ordinance to authorize a question regarding a use tax to be placed on the November 2, 2021 ballot.

Recommendation:​​ Approve the Ordinance.

Analysis:​​ Pursuant to the authority granted by the provision of Sections 144.060 through

144.761 RSMo., the City of Raytown is authorized to ask voters to approve a use tax.

A use tax applies to purchases from out-of-state retailers. Currently, someone making local purchases pays the City’s sales tax rate of 2.50% on every purchase (1% General Fund, .50% Transportation Fund, .375% Capital Fund, .50% Public Safety Fund .125% Park Fund). ​​​​ The City currently does not have a voter approved use tax; therefore, any items purchased from a business located outside of Missouri does not require the business to collect and remit the local sales tax.

Adoption of a use tax would require that the same tax rate is charged on items purchased locally or online.

The City of Raytown took similar steps in August 2016, when voters were asked to consider an initiative dealing with out-of-state motor vehicle sales, trailers, boats, outboard motors and RV’s. Voters approved the continuation of the tax by 72%.

The Missouri Municipal League in conjunction with the Missouri Department of Revenue, has completed an extensive analysis regarding the potential revenue being lost across the State in those cities that do not have a use tax. A use tax would generate an estimated $400,000.00 annually, dependent on the City’s gross receipts.

Alternatives:​​ Failure to adopt this ordinance would leave the City without the funds.

Budgetary Impact:​​ 

Not Applicable

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BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

AN ORDINANCE IMPOSING A USE TAX AT THE RATE OF TWO AND ONE-HALF PERCENT (2.5%) FOR THE PRIVILEGE OF STORING, USING, OR CONSUMING WITHIN THE CITY ANY ARTICLE OF TANGIBLE PERSONAL PROPERTY PURSUANT TO THE AUTHORITY GRANTED BY AND SUBJECT TO THE PROVISION OF SECTIONS 144.600 THROUGH​​ 

144.761 RSMO; PROVIDING FOR THE USE TAX TO BE REPEALED, REDUCED OR RAISED IN THE SAME AMOUNT AS ANY CITY SALES TAX IS REPEALED, REDUCED, OR RAISED; AND PROVIDING FOR SUBMISSION OF THE PROPOSAL TO THE QUALIFIED VOTERS OF THE CITY FOR THEIR APPROVAL AT THE GENERAL ELECTION CALLED AND TO BE HELD IN THE CITY ON NOVEMBER 2, 2021, AND PROPOSING THE FORM OF THE BALLOTS TO BE EMPLOYED AT SAID ELECTION AND DIRECTING THE CITY CLERK TO DO ALL THINGS CALLED FOR BY LAW IN CONNECTION WITH THE HOLDING OF SAID ELECTION​​ 

WHEREAS, the City has imposed local sales taxes, as defined in Section 32.085 RSMo., at the rate of 2.50%; and,

WHEREAS, the City is authorized, under Section 144.757 RSMo., to impose a local use tax at a rate equal to the rate of the local sales taxes in effect in the City; and,

WHEREAS, the proposed City use tax cannot become effective until approved by the voters at a municipal, county or state general, primary, or special election; and,

WHEREAS, the Board of Aldermen of the City of Raytown, Missouri, has determined it would be in the best interests of the City of Raytown, Missouri to impose a use tax;

NOW THEREFORE, BE IT ORDAINED BY THE BOARD OF ALDERMEN OF THE CITY OF RAYTOWN, MISSOURI, AS FOLLOWS:​​ 

SECTION 1 – SUBMISSION TO THE VOTERS. Pursuant to the authority granted by, and subject to, the provisions of Sections 144.600 through 144.761 RSMo., a use tax is imposed for the privilege of storing, using or consuming within the City any article of tangible personal property. This tax does not apply with respect to the storage, use or consumption of any article of tangible personal property purchased, produced or manufactured outside this State until the transportation of the article has finally come to rest within this City or until the article has become commingled with the general mass of property of this City.

SECTION 2 – RATE IMPOSED.​​ The rate of the tax shall be two and one-half percent (2.50%). If any City sale tax is repealed or the rate thereof is reduced or raised by voter approval, the City use tax rate also shall be deemed to be repealed, reduced or raised by the same action repealing, reducing, or raising the city sales tax.

SECTION 3 – BALLOT FORM.​​ This tax shall be submitted to the qualified voters of Raytown, Missouri, for their approval, as required by the provisions of Section 144.757 RSMo., at the General Election hereby called and to be held on the 2nd​​ of November, 2021. The ballot of submission shall contain substantially the following language:

BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

FOR GENERAL ELECTION IN THE CITY OF RAYTOWN, MISSOURI ON TUESDAY, NOVEMBER 2, 2021

“Shall the City of Raytown 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

INSTRUCTIONS TO VOTERS

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”.

SECTION 4 – ADMINISTRATION. That any sales tax imposed pursuant to this ordinance shall be computed, imposed, reported, administered, collected, enforced and shall operate in all respects in accordance with the provisions of the Revised Statutes of the State of Missouri and upon such forms and under such administrative rules and regulations as may be prescribed by the Director of Revenue, any provision of this ordinance notwithstanding.

SECTION 5 – NOTIFICATION OF DIRECTOR OF REVENUE. Within ten (10) days after the approval of this ordinance by the qualified voters of Raytown, Missouri, the City Clerk shall forward to the Director of Revenue of the State of Missouri by United States Registered Mail or Certified Mail, a certified copy of this ordinance together with certifications of the election returns and accompanied by a map of the City clearly showing the boundaries thereof.

SECTION 6 – EFFECTIVE DATE OF TAX. That any sales tax imposed pursuant to this ordinance shall be effective on the first day of the applicable calendar quarter after the director of revenue receives notice of the adoption of the sales tax.

SECTION 7 – REPEAL OF ORDINANCES IN CONFLICT. All ordinances or part of ordinances in conflict with this ordinance are hereby repealed.

SECTION 8 – SEVERABILITY CLAUSE. The provisions of this ordinance are severable and if any provision hereof is declared invalid, unconstitutional or unenforceable, such determination shall not affect the validity of the remainder of this ordinance.

SECTION 9 – EFFECTIVE DATE.​​ This Ordinance shall be in full force and effect from and after the date of its passage and approval.

BILL NO. 6579-21 ORDINANCE NO.​​ _______ SECTION NO. III-A-9​​ 

BE IT REMEMBERED​​ that the above was read two times by heading only,​​ PASSED AND ADOPTED​​ by a majority of the Board of Aldermen and​​ APPROVED​​ by the Mayor of the City of Raytown, Jackson County, Missouri, 17th​​ day of August, 2021.