October 16, 2021

By City of Raytown

On Tuesday, Nov. 2, voters will be asked:

“Shall the City of Raytown 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 shall also be reduced or raised by the same action?”

If you want to know more regarding the November 2nd ballot question you have several opportunities to educate yourself. Two public meetings will be held to inform residents. Mayor Mike McDonough and Alderman Ryan Myers will hold a morning coffee and conversation on Thursday, Oct. 21 from 7:30 to 9 a.m. at Raytown Christian Church. Alderwoman Bonnaye Mims will host a town hall meeting at the Raytown Wellness Center on Oct. 28 from 6 – 7 p.m.

Below are 10 facts explaining the use tax and how it is applied.

What is a use tax?
A local use tax is a tax imposed on the storage, use or consumption of tangible, personal property. If approved, a local use tax would be applied to goods, services purchased, delivered, and used in Raytown from certain online and out-of-state vendor instead of a sales tax.

Is this a tax increase?
No. A local use tax will NOT increase or change our local sales tax. If approved, the use tax will be applied to some out-of-state and online purchases. It is only collected when sales taxes are NOT collected.

Is a use tax a double tax?
No. A local use tax would be applied to goods purchased, delivered and used in Raytown from certain online and out-of-state vendors. Buyers NEVER pay both a use tax and local sales tax on the same transaction.

What is the sales tax rate?
The local sales tax rate is 2.5%. In Missouri, the local use tax rate is ALWAYS the same as the local sales rate (2.5%). A buyer NEVER pays sales tax and use tax on the same transaction.

Are other cities in the metro collecting a use tax?
Yes. In the metro, Kansas City, Independence, Lee’s Summit, Liberty, Gladstone, and Grandview have passed a use tax. Statewide, nearly half of Missouri cities have a use tax in place.

Will out-of-state retailers be subject to the same tax rate as local retailers?
Yes. Currently, Raytown’s local retailers collect sales taxes. Some out-of-state retailers collect local taxes while others do not. The use tax will subject all in state, out-of-state and online retail sales purchased to the same tax rate.

What will the City do with the funds collected?
The revenue generated from a local use tax could be used to support essential City services such as Police, snow removal, street repairs etc. It is estimated that a local use tax could generate $200,000 – $400,000 annually.

How does a use tax benefit Raytown residents?
A local use tax will help maintain the current level of city revenue. As more retail sales shifts to out-of-state purchases, a local use tax will replace lost sales tax revenue for essential city services without increasing our local sales tax.

Do I pay a use tax if I don’t shop online or with out-of-state vendors?

Are any items exempt from use taxes?
Yes. If an item is exempt from state and local sales tax, it is also exempt from the state and local use tax.

Why is a use tax needed? Simply put consumers’ shopping habits have changed. In 2020, shoppers spent $861 billion with U.S. online merchants nationally, which is up 44% year-over-year, according to Digital Commerce 360 estimates.

Locally, the city has lost 12.5% in sales tax revenue in the last five years. It is anticipated that this trend will continue as more and more people shop online and with out-of-state vendors. A local use tax will eliminate the disparity in tax rates collected locally and from out-of-state and online vendors.

To vote on this important ballot question, the general municipal election will be held on Tuesday, Nov. 2. Polls open from 6 a.m. to 7 p.m. Go to Jackson County Election Board, https://jcebmo.org, or call 816-325-4600 to find your polling location.