skip to main content

Use Tax

Prop 1 - use tax, Columbia, MO, April 5, 2022

On April 5, 2022, the City of Columbia and Boone County both successfully passed their use tax measure. 

The Columbia tax received 11,289 for yes and 8,282 for no.

The Boone County tax received 15,278 for yes votes and 13,157 for no.

Scroll to learn more!

The Columbia City Council has voted to call a special election on the question of whether to impose a local use tax. The election will take place Tuesday, April 5, 2022. 

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 Columbia vendors. 

It would also help the City maintain its revenue while continuing to provide the services our residents expect.

If voters approve Prop 1, it’s estimated that a use tax would bring  $5.6 million back into our community each year.

 Official ballot language

PROPOSITION 1

Shall the City of Columbia, Missouri 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 on goods purchased from out of state (most often online) for delivery to and use in the City of Columbia.

Currently, the City of Columbia collects a 2% local tax on all goods and services purchased from local businesses. However, that is not the case for purchases made online from out-of-state vendors. 

For example, if a person purchases a piece of furniture at a store located here in Columbia, the vendor collects a state and local sales tax on that item. However, if the same person purchased the same piece of furniture online from a vendor located outside the state of Missouri, the vendor is not required to collect the same local sales tax. 

If voters approve Prop 1 on April 5, 2022, a 2% local use tax would be collected on goods and services purchased from out-of-state vendors. The revenue generated from the use tax would be allocated in the same manner as the City’s local sales tax which funds public safety, public health, streets and sidewalks.

Residents would benefit from a use tax as it is estimated the City would be able to build new fire stations and hire as many as seven new firefighters and eight new police officers, while maintaining these items and positions going forward. The funds could also be used to repave up to 15 lane miles of roads and repair 30 city blocks of sidewalk annually.

The use tax rate would be the exact same as the resident’s local sales tax rate. Residents would never have to pay both use and sales tax on the same purchase.

Use Tax funds could provide the city up to 7 new firefighters, 30 blocks of sidewalks, 15 lane miles of streets or 8 new police officers.
Modernizing Columbia's Revenue Sources
Use Tax and general fund breakdowns. For data sources, see the important documents section in the FAQ.

What would a use tax mean for Columbia 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 1 ballot measure, online, out-of-state purchases would be taxed at the exact same rate as in-state purchases.

It’s estimated that the City would collect $5.6 million annually through the use tax. The funds collected by the use tax would be spent in the same manner as the local sales tax. 

As noted in the chart to the left, the use tax funds would be allocated to capital improvements, parks, transportation and the City’s general fund. The 50% that is allocated to the general fund is then further broken down into public safety, administrative support, health, parks, transportation and capital improvements. The largest piece of the general fund goes to fund public safety (57%).

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 now represent more than 13% 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 our residents expect.

The City relies heavily on revenues from local sales tax to fund basic services, such as road maintenance and public safety. 

Because the City doesn’t have a use tax in place, Columbia has missed out on approximately $30 million in tax revenue due to online shopping over the last five years.

 

 
A graph detailing online shopping as a percentage of total retail. For data sources, see the important documents section of the FAQ.
More than 220 Missouri Cities have a use tax

Frequently asked questions

Does Boone County also have a separate use tax question on the April 5 ballot?

Yes. Boone County has also placed its own use tax question on the April ballot. That means two use tax questions will be on the ballot, one for Boone County and one for the City of Columbia. Currently, neither the county nor the City collect a use tax.

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.

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%). 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.

How much will the City of Columbia receive from a local use tax?

It’s estimated that the City would collect $5.6 million annually through the use tax.

Why is this important to City of Columbia’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 Columbia needs to maintain this revenue stream for vital City services such as:

  • Public safety (police and fire)
  • Roads
  • 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 Columbia 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 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.

Important documents and finance information

Paid for by the City of Columbia, Missouri. De’Carlon Seewood, City Manager | 701 E. Broadway, P.O. Box 6015, Columbia, MO 65205

Prop 1 - use tax, Columbia, MO, April 5, 2022

The Columbia City Council has voted to call a special election on the question of whether to impose a local use tax. The election will take place Tuesday, April 5, 2022. 

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 Columbia vendors. 

It would also help the City maintain its revenue while continuing to provide the services our residents expect.

If voters approve Prop 1, it’s estimated that a use tax would bring  $5.6 million back into our community each year.  

Official ballot language

PROPOSITION 1

Shall the City of Columbia, Missouri 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?

Use Tax funds could provide the city up to 7 new firefighters, 30 blocks of sidewalks, 15 lane miles of streets or 8 new police officers.

A use tax is a local tax on goods purchased from out of state (most often online) for delivery to and use in the City of Columbia.

Currently, the City of Columbia collects a 2% local tax on all goods and services purchased from local businesses. However, that is not the case for purchases made online from out-of-state vendors. 

For example, if a person purchases a piece of furniture at a store located here in Columbia, the vendor collects a state and local sales tax on that item. However, if the same person purchased the same piece of furniture online from a vendor located outside the state of Missouri, the vendor is not required to collect the same local sales tax. 

If voters approve Prop 1 on April 5, 2022, a 2% local use tax would be collected on goods and services purchased from out-of-state vendors. The revenue generated from the use tax would be allocated in the same manner as the City’s local sales tax which funds public safety, public health, streets and sidewalks.

Residents  would benefit from a use tax as it is estimated the City would be able to build new fire stations and hire as many as seven new firefighters and eight new police officers. The funds could also be used to repave up to 15 lane miles of roads and repair 30 city blocks of sidewalk annually.

The use tax rate would be the exact same as the resident’s local sales tax rate. Residents would never have to pay both use and sales tax on the same purchase.

What would a use tax mean for Columbia businesses?

Use Tax and general fund breakdowns. For data sources, see the important documents section in the FAQ.

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 1 ballot measure, online, out-of-state purchases would be taxed at the exact same rate as in-state purchases.

It’s estimated that the City would collect $5.6 million annually through the use tax. The funds collected by the use tax would be spent in the same manner as the local sales tax. 

As noted in the chart to the left, the use tax funds would be allocated to capital improvements, parks, transportation and the City’s general fund. The 50% that is allocated to the general fund is then further broken down into public safety, administrative support, health, parks, transportation and capital improvements. The largest piece of the general fund goes to fund public safety (57%).

Funding sources that better reflect consumer behavior

A graph detailing online shopping as a percentage of total retail. For data sources, see the important documents section of the FAQ.

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 now represent more than 13% 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 our residents expect.

The City relies heavily on revenues from local sales tax to fund basic services, such as road maintenance and public safety. 

Because the City doesn’t have a use tax in place, Columbia has missed out on approximately $30 million in tax revenue due to online shopping over the last five years.

Frequently asked questions

Does Boone County also have a separate use tax question on the April 5 ballot?

Yes. Boone County has also placed its own use tax question on the April ballot. That means two use tax questions will be on the ballot, one for Boone County and one for the City of Columbia. Currently, neither the county nor the City collect a use tax.

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.

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%). 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.

How much will the City of Columbia receive from a local use tax?

It’s estimated that the City would collect $5.6 million annually through the use tax.

Why is this important to City of Columbia’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 Columbia needs to maintain this revenue stream for vital City services such as:

  • Public safety (police and fire)
  • Roads
  • 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 Columbia 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 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.

Important documents and finance information

Paid for by the City of Columbia, Missouri. De’Carlon Seewood, City Manager | 701 E. Broadway, P.O. Box 6015, Columbia, MO 65205

Partly Cloudy45°F