July 11th, 2017

NOT A New Tax!!! (Part 2)

Carthage voters will have the opportunity on August 8, 2017 to decide whether or not the City will continue its collection of local Sales Tax on vehicle purchases from out-of-state vendors or from private individuals.  

For almost 50 years, residents have paid City Sales Tax on vehicles purchased in another state or from a private individual when they licensed the vehicle.  Those tax revenues went to the City to help pay for essential City services funded by those Sales Taxes, including street maintenance and improvements, police, fire and parks & recreation services. 

However, in 2012, the Missouri Supreme Court handed down a decision (Street v. the Director of Revenue) which determined that out-of-state or private purchases were exempt from the local Sales Tax.  In 2016, the Missouri Legislature provided temporary relief from this tax loophole, allowing cities to continue to collect the local Sales Tax on these vehicle purchases but also requiring cities to seek voter approval to continue the tax by November of 2018.

Carthage officials stress that this is not a new tax but just a continuation of something that has gone on for decades, which applies only to those who choose to purchase a vehicle from another individual or from an out-of-state dealer.

If the continuation of the collection is turned down by local voters, (that is, if voters do not agree the City should continue collecting the Sales Tax) the measure would no longer allow an important funding source to continue to support City services.    If not allowed to continue, City Staff estimates the City could lose $70,000 or more annually.  They say the loss will likely increase in future years as costs increase.    To maintain the present level of City services, the City needs to retain the Sales Tax on these purchases.  The City also said that Sales Tax, the major source of funding for General Fund services, ended fiscal 2017 a little over 8% ($196,200) below the same level of collections in fiscal 2016.  If this additional amount were to be lost, the drop in Sales Tax revenue in the General Fund would be about 10%. 

In addition to the revenues which the City would lose if the tax is discontinued, Carthage auto dealers would be placed at a competitive disadvantage to out-of-state businesses.  Out-of-state auto dealers do not have to charge the City Sales Tax on vehicle purchases while local purchases would.  Keeping those sales local would not only generate tax dollars for the city, it would help local businesses who create local jobs and reinvest in the community.  Further, the State would still continue to collect its share (4.225%) of sales of vehicles in or out of state.  

According to the Missouri Municipal League (MML), as of March 2017, there have been 196 municipalities across Missouri that have received voter approval for the continuation of the local Sales Tax on out-of-state vehicle purchases. 

The Carthage Chamber of Commerce supports to continue collection of the of local Sales Tax on vehicle purchases from out-of-state vendors or from private individuals. Vote YES August 8th.

View Press Release (PDF)

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