Fulton voters will decide Tuesday whether to pass a city use tax.
April 3 Election Coverage
[]City Administrator Bill Johnson said some are confused about what exactly a use tax is and when it applies.
"It's a totally self-reported tax," he said. "It is for your out-of-state internet purchases."
If passed, it would add a 2.5 percent tax to purchases made out-of-state by Fulton residents. Missouri and Callaway County already have use taxes in place, at 4.225 percent and 1 percent, respectively. Up to $2,000 in purchases per person per year would be exempt, Johnson said.
"Basically, because of the $2,000 per person exemption, if you're not paying the tax now it's unlikely you'd be paying it in the future," he said.
It's most likely to affect businesses, he added.
If you order something online from a business in Missouri, the use tax wouldn't apply. Likewise, if - for example - you got in your car, drove to Arkansas, bought a boat, paid Arkansas' sales tax and drove it back to Missouri, the use tax wouldn't apply.
In other words, a use tax applies only where the sales tax doesn't.
"It is not a double tax," Johnson said.
Taxpayers must self-report purchases qualifying for the use tax because the state of Missouri cannot require out-of-state companies with no direct connection to Missouri (such as a branch) to collect and remit use taxes. Johnson said he's not sure how the reporting process will work. Currently, Fulton has no way of enforcing reporting, he added.
If passed, the use tax is expected to bring in $90,000 annually for Fulton's general fund, Johnson said. He thinks the money could really help - the general fund covers everything from parks to police to sidewalks.
"When you talk public safety stuff, we spend about $70,000 a year on getting new police cars," he said. "A new fire truck can go to close to $400,000."
Originally, the city planned to direct use tax revenue toward public safety capital improvements, but the ballot language approved by the state attorney general's office doesn't allow the city to specify, Johnson added.
Currently, half of all Missouri cities with population of 2,000 or greater have use taxes, he said.
The ballot language is as follows: "Shall the City of Fulton, Missouri impose a local use tax at the same rate as the total sales tax, currently 2.5 percent, provided 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."
A "yes" vote is to impose the use tax, and a "no" vote is against it.