5 metro cities proposing use tax on April 3 ballot to make up for tax lost to online sales

KANSAS CITY, Mo. -- Voters will hit the polls Tuesday, and in five cities in the metro, they'll decide if online purchases should be a little more expensive.

A proposed "use tax" in Blue Springs, Liberty, Independence, Odessa and Belton would allow cities to collect tax when you buy something online from an out-of-state vendor.

Right now, some cities claim they're losing out on sales tax money from online sales and say the losses hurt municipal services.

The National Conference of State Legislatures estimates states lost out on $23. 3 billion in revenue by not being able to collect sales tax when people shop online.

If Independence voters say yes to the use tax, purchases from online retailers like Amazon will be taxed by 2.25 percent in that municipality. You'll either pay a use tax online or a sales tax in person.

“It certainly isn't going to replace the revenue that we are currently losing from local sales tax, but it will help to allow us to continue the level of service we already have,” Independence Mayor Eileen Weir said.

Weir said the city loses out on an estimated $1.5 million in revenue by not collecting taxes on online purchases. That's how much they plan to bring in if the use tax is approved. Some of it will go to the general fund, which Weir said it will help the city fulfill its five-year plan of blight removal.

“The only way to fund that is through general fund dollars,” Weir said.

Belton City Manager Alexa Barton said they're losing out on between $200,000 and $300,000 on online sales tax. Right now, if you buy something online, you pay taxes, but they go to wherever you bought your items from -- not where you live.

“This is not a tax that's on top of the existing tax,” Barton said.

If approved, Barton said Belton will use the use tax money for one-time capital purchases. This year, the had to slash things like new police cars from the city's budget because of a lack of funding.

“There are no cars,” Barton said. “We had maintenance in there for our jail, buildings -- those all had to be cut.”

Although city leaders said the tax will help them provide services, some residents said they won't support it at the polls Tuesday.

“It`s a free market guys,” said Karl Herrick, an Independence resident. ”This is the way capitalism works. The free market, including the cities, lose out. You have online businesses that do a better job of delivering services and products. That’s just the cost of doing business. And if online businesses are doing a better job of it, and the cities lose out in taxes, you know, tough.”

Blue Springs officials said they conservatively estimate the city is losing out on $400,000 in sales tax. If the use tax passes, they will use it to fund infrastructure, parks, public safety and the general fund.

Leaders in Odessa say the Missouri Department of Revenue looked at numbers from 2015 and estimated the city had $66,000 in uncaptured funds from online sales tax. According to officials, $17,000 of those uncaptured funds were just from Amazon. If the use tax passes in Odessa, it will be used for general services.

Kansas City has had a use tax since 1990 that covers several areas, including online purchases.

Grandview's use tax took effect in January. The city just got its first distribution from that, which was about $17,000. It will go to Grandview's general fund.