The Aug. 4 special election is less than two weeks away, and members of the business community are weighing in on why passing both tax issues will benefit local businesses and the community.
Only voters living in the four wards of the City of Sedalia will be heading to the polls Aug. 4, and they will be voting on two separate tax issues: creating a city use tax, and extending a current city sales tax on out-of-state vehicle purchases.
The vehicle purchases tax is a local sales tax on vehicles bought out-of-state or from an individual (the law specifically states anyone who is not a licensed Missouri dealer). It is paid when the vehicle is originally licensed or you apply for a title.
The City of Sedalia has this tax in place already, so it is not a new tax, but due to a recent change in Missouri law, it will expire in 2016 if not renewed by voters in August, which could affect local car dealerships.
“If you’re a customer and you purchase a vehicle from Bryant, they register at the license bureau, pay city, state and county tax — would it be fair for someone to buy the same vehicle but just because it was in another state, they pay less tax on that vehicle?” said Kyle Herrick, of Bryant Motors. “If we don’t extend the current tax, it doesn’t keep the playing field level for car dealers, nor customers who do business in Sedalia, Missouri.”
Herrick also noted that encouraging car sales within the Sedalia community will continue to support businesses that in turn support residents.
“During fundraising efforts, for United Way or a benefit for someone with cancer, folks hit the car dealers pretty frequently, for donations and support, and we’re pretty good about doing that,” he said. “Do they ever go out of state to ask dealerships to participate? I’m pretty sure they don’t. So all dealers in Sedalia contribute a great deal to the support of the community in other ways than just selling cars.”
This tax generates about $100,000 a year for city services. Not passing the vehicle sales tax would mean losing $100,000 the city already receives and depends on to provide services.
“We hope a lot of citizens are shopping here in Sedalia because there are so many car dealers to choose from; we’re hoping people are shopping locally anyway,” said Angie Thomas, executive director of the Sedalia Area Chamber of Commerce. “It would hurt our local car dealerships. … Why not have that revenue be here versus some other location — we want to keep business local, keep building Sedalia and make it a great community. It’s great already, but this could help it be bigger and stronger, and why wouldn’t we want to do that for our community.”
A use tax is paid on property bought out-of-state but used in Missouri, only when a sales tax is not applied at the time of the purchase. Pettis County and the State of Missouri both operate under a use tax. The use tax, if approved in Sedalia, will have the same rate as the city’s sales tax: 2.375 percent.
The tax would primarily affect out-of-state contractors who work on commercial projects in Sedalia, such as companies who are working on Hobby Lobby and Kohl’s.
For it to affect an individual, one must have more than $2,000 in purchases where a sales tax was not applied. If a citizen isn’t filling out a use tax return now, chances are they won’t need to do so if the proposed city use tax is approved.
The use tax would generate about $685,000 in additional revenue for the city.
“The use tax would provide additional revenue to help invest into the community,” said Karl Kramer, of McCarthy Toyota and president of the Sedalia Chamber. “It’s not negative because if you’re not paying a use tax now, you probably won’t have to. Folks who pay use tax are businesses who do construction in the community, buying materials outside the city and bring them in the city to use as part of construction of Kohl’s and Hobby Lobby.
“… Sedalia does not have a use tax, and we’re missing out an opportunity to stay relevant as a destination to move to,” he added. “There are a good amount of people who enjoy living here, but when someone comes into work at Bothwell, they look for a good place to move to … It makes it more attractive to people who want to come here.”
Thomas, Herrick and Kramer encouraged voters to educate themselves before heading to the polls so they are informed on both issues.
“The biggest thing is misinformation — people hear ‘tax’ and they think it’ll affect them negatively. If they’re not paying (use tax) now, they won’t pay it going forward,” Kramer said. “I’ve told people, if I’m going to Steak ‘n Shake to get a hamburger for lunch, enacting a use tax is not going to increase the cost of that hamburger. It’s not going to affect disposable income for the vast majority of folks in Sedalia.”
For more information about the tax issues, visit YesForSedalia.com.
Nicole Cooke can be reached at 660-826-1000 ext. 1482 or @NicoleRCooke.