ST. LOUIS COUNTY, Mo. — St. Louis County residents will vote in April whether to approve a use tax on out-of-state internet purchases that could help local municipalities gain needed revenue.

A similar proposition will be on the ballot for many other local municipalities. Voters will be asked to pass a use tax that would be equal to sales taxes placed on purchases from local brick-and-mortar stores. 

Last June, Missouri Gov. Mike Parson signed SB 153 into law where out-of-state online stores and retailers that make more than $100,000 in sales yearly, collect Missouri’s 4.2% sales tax on purchases and remit the funds to the Missouri Department of Revenue. The law goes into effect Jan. 1, 2023.

However, at the county and city level, voters have to approve to allow out-of-state online stores and retailers to collect and remit local sales tax.

Consumers would not pay a use tax in addition to a local sales tax. They would either pay a use tax when purchasing online or they would pay a sales tax when making a purchase at a local brick-and-mortar store. 

The use tax would always be equal to the local sales tax. In St. Louis County, the sales tax rate is 3.5%. Sales tax rates for municipalities within the county vary depending where residents live. 

“Every time someone in a community purchases an item online that isn’t required to pay that tax, that’s actually reducing revenues for both the county and the municipality,” said Pat Kelly, executive director of the Municipal League of Metropolitan St. Louis. 

He added that internet purchases have increased over the past couple of years because of the COVID-19 pandemic with people staying at home more. 

“Most municipalities’ primary source of income is sales tax, so if those revenues are going down, that is directly affecting the services that they provide like police, fire, trash, and public works, and parks, and those kinds of things,” Kelly said.

Last year, 15% of all retail sales were purchased online nationwide, and six years ago, the percentage was at seven, according to Kelly. 

“So, think of a 7% reduction in your income, plus inflation and other things, so that’s a big reduction in local revenue,” Kelly said.

In years past, someone who purchased more than $2,000 online annually was supposed to pay sales tax directly to the state, according to Kelly. The vendors would not have collected the sales tax at the time of purchase. Seldom did residents voluntarily pay sales tax for their online purchases to the state. 

That changed in 2018 when the U.S. Supreme Court ruled states can require out-of-state sellers to collect and remit sales tax for municipalities even if the seller has no physical presence in the state where consumers live.

So far, more than 230 cities across Missouri already have passed a use tax, including 38 out of 88 municipalities in St. Louis County, according to Kelly.

In December, the St. Louis County Council unanimously approved to put the use tax question on the April 5 ballot. A total of 28 municipalities within St. Louis County also will have the use tax question on ballots. 

Some cities include Ballwin, Ellisville, Eureka, Ferguson, Florissant, Jennings, Manchester, Town and Country, Jennings, Shrewsbury and Webster Groves. 

Residents in St. Charles City will additionally ‌vote on the use tax. St. Charles City’s sales tax rate is 2%.

If voters do not pass the use tax, then local municipalities would not receive sales taxes on items purchased online from out-of-state retailers and stores. 

Election date is April 5.