April 3, 2018 Ballot Issue: Use Tax
On January 22, the Liberty City Council unanimously voted to put a local use tax, equal to the City's sales tax (currently 3.375%) on the ballot for voter consideration on April 3. If approved, the City will invest in construction of a new animal shelter, make improvements to City Park, neighborhood parks and modernize funding for basic city services.
What is a Use Tax?
A Local Use Tax is a tax placed on goods purchased out of state for delivery to and use in Liberty. It applies only to transactions where a sales tax was not already charged. To keep things simple, local use tax is applied at the same rate as the City’s sales tax. A transaction will never be subject to both a use tax and a sales tax.
The State of Missouri and Clay County already have use taxes in place that apply to the out-of-state purchases made by Liberty residents and businesses. The amount of use tax due on a transaction depends on the combined (local, county and state) use tax rate in effect at the Missouri location where the tangible personal property is delivered. In general terms, the sales tax rate is based on the point of sale, and the use tax is based on the point of delivery.
Why is a Use Tax being proposed in Liberty?
To maintain existing City services and provide the capital improvements that our residents expect, the City needs to modernize its revenue sources to keep pace with current and evolving retail purchasing trends.
The City’s General Fund, which covers the necessary operating expenses for most City services including street maintenance, Animal Control, Senior Services and IT cybersecurity, relies heavily on revenues from sales taxes, property taxes and franchise fees from cable and utilities. Similarly, Parks & Rec services are dependent on property and sales taxes.
These traditionally dependable revenue sources are changing:
- Consumer shopping habits shifting toward online shopping.
- City Council has held the line on property taxes for the past 10 years.
- Utility franchise fees stagnating.
- Due to a Missouri Supreme Court ruling, without a use tax Liberty will also lose approximately $200,000/year in out-of-state and private party motor vehicle sales tax revenue.
How Will the City utilize Use Tax revenue?
If voters approve a use tax, out-of-state businesses would apply the same tax rate as local brick and mortar stores. This funding would provide for some capital improvements as well the basic services the City provides every day.
Many of the City’s parks and trails are showing signs of age with some amenities becoming increasingly hard to repair or replace due to their age (discontinued parts).
If approved and if revenues come in as projected, this would allow the City to:
- Replace an outdated and inadequate Animal Shelter
- Make substantial upgrades to City Park including an inclusive playground for children of all abilities, a new expanded sprayground and new restrooms
- Improvements to the Liberty Community Center: fitness facilities, pool and addition of a family restroom.
- Make improvements throughout the Neighborhood Parks system
- Maintain critical city services like Public Works street maintenance, IT cybersecurity, senior citizen services and Parks & Rec services
What will happen if Liberty voters don’t approve the use tax?
Without a use tax the City of Liberty will:
- Lose $200K/year revenue from the out-of-state vehicle sales tax that is currently collected.
- Be unable to address needed animal shelter replacement or parks system upgrades.
- Consider reductions or elimination of City services.
- Consider increase(s) in property taxes.
- Face potential loss of future revenue through changes in Federal/State legislation on retail sales taxes.
Have questions? Let us know via email or by calling 816.439.4415.
Paid for by the City of Liberty • Lyndell Brenton, Mayor • 101 E. Kansas St., Liberty, MO 64068