Residents living in the City of Manchester and many neighboring communities will have the opportunity to vote in the April 5 election on Proposition U: a proposal to enact a Local Use Tax on the purchase of online goods by Manchester residents from out-of-state vendors such as Amazon, Overstock.com, or Wayfair.
The proposed local use tax would be applied to online purchases in the same way that a sales tax is paid on a local purchase. When individuals make purchases at retail stores in Manchester, they pay the sales tax that is applicable at that location. Purchases by Manchester residents from out-of-state, online vendors go untaxed. For the City of Manchester to receive revenue from online sales, the City’s voters must authorize its collection.
The enactment of a local use tax would ensure that online, out-of-state purchases are taxed the same as purchases made from Manchester’s local businesses. The global pandemic has caused a boom in online sales, forcing local Manchester businesses into an unfavorable position by competing with different tax laws from which large out-of-state online vendors benefit.
If approved by Manchester residents, the City would reinvest new revenues to eliminate the $6 monthly fee charged to residents for waste removal services.
We understand that you may have questions regarding Prop U. Here's a list of FAQs.
What is a local Use Tax?
A Use Tax is a tax on the purchase of goods by Missouri residents from out-of-state, online retailers.
I already pay sales tax. Is this the same thing?
No. Manchester's current sales tax applies to purchases made in Manchester while the local use tax applies to online sales. Purchases cannot fall into both groups and cannot be taxed twice.
How can a Use Tax benefit my community?
If approved by Manchester residents, the City would reinvest new revenues to eliminate the $6 monthly fee charged to residents for waste removal services. A local use tax ensures out-of-state purchases are taxed at the same rate as purchases from your local business. As internet purchases increase, local revenues decrease. Funds generated from the use tax can be used to pay for vital municipal services.
What is the rate of the Use Tax?
The proposed use tax rate is the same rate as the Manchester sales tax rate, which is 1.25%. Any change to the local sales tax would also change the rate collected for the online use tax.
Here are a few fast facts about Prop U.
|Would I pay the local Use Tax on this purchase?|
|Groceries, clothing, or goods from local retailers||X|
|Ticket purchases for local events||X|
|Netflix or Hulu Membership||X|
|Dinner from a local restaurant||X|
|Bulk cleaning supplies from an out-of-state, online company that did not charge sales tax||X|
|Mechanical equipment from an out-of-state business that did not charge sales tax||X|
The language on the Municipal Election ballot will read as follows:
"Shall the City of Manchester 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 rate shall also be reduced or raised by the same action?"
If you have questions, please reach out.
To learn more or to ask questions on how Proposition U could benefit you, the community, and Manchester’s local businesses, please call Mayor Mike Clement at 314-680-9278 or City Administrator Justin Klocke at 636-227-1385 x106. Register to vote in the April 5, 2022 General Municipal Election by visiting www.manchestermo.gov/voterregistration.