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Platte City FAQ - Local Use Tax Information

 
Posted on Wednesday May 06, 2020
 

Platte City FAQ - Local Use Tax Information 

Election: April 7, 2020
FAQ Informational Handout


On January 21, 2020 the Platte City Board of Aldermen voted to place a local Use Tax, on the April 7, 2020 ballot. 


What is a local use tax?


A local use tax applies the local sales tax rate to retail purchases from out-of-state vendors that are delivered to a Platte City address.    


Why is this needed?


It creates a level playing field for local businesses and provides needed funding for important City services such as police, streets maintenance, parks and infrastructure projects.


How does this help local business?


Approving the use tax means all retail sales are taxed at the same rate.  Currently out-of-state vendors have a competitive advantage; local stores pay the local sales tax rate, while out-of-state vendors do not.  Approving the use tax will treat all sales the same whether you buy in Platte City or on line from an out-of-state vendor.


The Platte City Area Chamber of Commerce has endorsed the approval of this ballot measure.


How does this fund important City services?


Use tax revenue, like sales tax revenue can only be used for basic city services; police, street maintenance, parks and infrastructure projects.


Platte City is receiving less revenue this year to fund basic services than it did in 2015.  Although the City has taken steps to reduce spending such as eliminating management positions, paying down debt and consolidating the municipal court, it is becoming harder to provide 2020 services on 2015 revenue.  Approving the use tax will provide local revenue that can only be spent on Platte City’s basic services.  


Approving a use tax adjusts the City’s revenue structure to the changes in consumer’s purchasing habits; less in store purchases and more online purchases.


Why is this tax fair?


All retail sales will be treated the same and will pay the same local tax rate.  When you order something online, delivery trucks use Platte City streets to deliver your package and our police patrols discourage anyone from taking that package from your porch.  Online vendors benefit from our local services but pay no taxes to support this work. 


Will this cause me to be double taxed on any purchase?


No.  The use tax is not applied to any purchase that has already paid a sales tax, a transaction is charged either a use tax or a sales tax, never both.   


Why is this on the ballot?


Changing e-commerce habits and increasing online sales from out of state vendors have slowed the collection of local sales tax revenue.  Approving the local use tax also eliminates the current sales tax advantage that out-of-state vendors have over local stores and provides more funding for police, streets, parks and capital projects.


Platte City residents already pay the the State use tax and the Platte County use tax on purchases from out-of-state vendors.  Approving the local use tax would apply the City’s existing 2.375% sales tax to these purchases. Local use tax revenue will directly fund City police, street maintenance, parks and capital projects.


How much will the City of Platte City receive from a local Use Tax if approved? 


The City estimates the use tax would generate approximately $170,000 annually including $100,000 for police and streets, $35,000 for parks and $35,000 for capital projects.  


Do other cities and counties have a local use tax?


Yes. Approximately half of all Missouri cities already have a voter approved use tax including Kansas City, St. Joseph, Gladstone, Platte Woods and Liberty.  Platte County also has a county use tax.

Who pays the Local Use Tax?


You don’t pay the Local Use Tax unless you buy over $2,000 in merchandise a year out- of-state, on which no other sales or use taxes have been collected.  Both the State of Missouri and Platte County already collect local use taxes. If you do not already pay these, you will not be affected by Platte City’s local use tax.


If voters change the sales tax rate, what happens to the use tax rate?


The use tax rate increases or decreases at the same rate as the sales tax.  The use tax also has the same sunset provisions as the sales tax.


Official Ballot Language:


Shall the City of Platte City impose a local use tax at the same rate as the total local sales tax rate, currently 2.375 %, to fund police, street maintenance, parks and capital improvement functions, providing that if the local sales tax is reduced or raised by voter approval, the local use tax shall also be reduced or raised by the same action? A use tax return shall not be required to be filed by persons whose purchases from out-of-state vendors do not in total exceed two thousand dollars in any calendar year.

  X YES X 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.”


This educational information was paid for by: City of Platte City, Missouri

DJ Gehrt, City Administrator, 400 Main St, Platte City, MO 64079