Will a state Wayfair solution apply to Ozark?
When the Founding Fathers of Missouri structured the way our state would operate, or the municipalities decided how they would cover expenses for their residents; no one knew about the innovation and impact of the W.W.W.
I’ve heard a lot of confusion lately about the collection of online sales and use tax. The question continues to arise, “Isn’t the state handling that?” or “Doesn’t this [state legislation] solve our local problem regarding use tax?” The answer is NO. The Missouri legislators do not have the ability to wave a magic wand and enact legislation that would solve the issue of hemorrhaging internet sales and the impacts on the local economy.
Online shopping has changed the way business is done, the way consumers purchase goods, and the flow of revenue through our communities. eCommerce was on the rise prior to the COVID-19 pandemic but the last eleven months have drastically increased the rate of pace for internet retail consumption. “Online shopping’s share of total retail sales has been increasing approximately one percentage point per year, but a recent UBS analysis predicted that COVID-19 will immediately increase that share from 15 percent to 25 percent – a decade of change concentrated in several months.” (The Pandemic Will Change American Retail Forever
.) Furthermore, “According to e-commerce statistics for 2020, 95 percent of retail sales are expected to be made via the internet by 2040.” (IEDC: Restore Your Economy
Missouri and Florida are the only two states in the U.S. that do not have legislation in place to capture revenues from online purchases. There are currently seven bills being reviewed between the Missouri Senate and House of Representatives. Opinions vary on the use of funds and that divide has delayed our state from enacting a sound resolution addressing the disappearing funds desperately needed to forward our state. Some lawmakers wish to see the funds deposited to general revenue, like SB287; Senator Sandy Crawford is sponsoring the Governor’s Wayfair legislation with such a proposal. Others would like to use the revenue to reduce the personal income tax and another option proposes an earned income tax credit.
In speaking with economic development peers across Missouri, more companies choose to locate elsewhere due to the lack of funding for infrastructure than our income tax rate, currently ranked 4th lowest in the U.S. While legislators are currently debating these bills Missouri is projecting a $1 billion, or 10% shortfall for the 2021 budget. Last year’s budget saw a 9% decline to the tune of $864 million according to the Center on Budget and Policy Priorities
There is a broad consensus within the General Assembly that these taxes should be collected. The Government Relations committee for Show Me Christian County agrees, and our organization is advocating for a Missouri Wayfair solution. Imagine the improvements that could be made in Missouri if we saw a 25% increase to the budget by recapturing these lost funds instead of staring down steep cuts due to a 10% decline.
Ozark is also missing out on the opportunity to reinvest in its community, however there are no current plans to address this issue with a use tax on the local ballot. What does that mean for Ozark residents?
Show Me Christian County works with communities all across Christian County. Nixa, MO to the west is demographically parallel to Ozark. Nixa was able to regain nearly $1.1 million in lost internet sales revenue since they voted yes on the use tax in 2018. In June of 2020, at the height of the pandemic, Nixa experienced a 133.59% increase in use tax collection year over year. That is $1.1million Nixa can spend on Parks & Recreation, Road improvements, Public Safety or any other vital city service.
It is my hope that someday soon residents will be able to reverse the trend and also decide that Ozark is worth investing in. From the corporate perspective, it is difficult for a business to decide to invest in a community when the community doesn’t invest in itself. Until then Show Me Christian County continues to work alongside leaders to pursue grants and cost-share opportunities to maximize and encourage outside investment.
For more information on the use tax and why the Missouri Legislators cannot address this for the local communities please view the webinar SMCC hosted with Ray McCarty, President, and CEO of Associated Industries of Missouri. Understanding Wayfair and the Local Use Tax.
To contact Show Me Christian County with questions or economic development opportunities please visit showmeccmo.com
Andrea Sitzes, EFP | President & CEO
Show Me Christian County Economic Development