Clayton's Proposition 1
On November 6, Clayton residents will vote on Clayton’s proposal to implement the local use tax. Known as Proposition 1 (Prop 1), the local use tax applies to out-of-state purchases over the amount of $2,000 per year. The use tax is already collected by the state on out-of-state purchases and Prop 1 will allow the City to receive revenue from these purchases as well.
The local use tax will not be charged in addition to sales tax. Sales tax is for retail purchases within the state of Missouri while the use tax is for purchases from out-of-state vendors, which are exempt from sales tax.
If passed, the City anticipates receiving approximately $200,000 annually from Prop 1. The revenue generated will help offset the investment for additional firefighter/paramedics to meet the needs of the community.
Frequently Asked Questions
What is Prop. 1?
Prop. 1, on the Nov. 6 ballot, is asking for voter approval of a local use tax within the City of Clayton.
How will the tax revenue be used?
The revenue generated will help offset the investment for additional firefighter/paramedics to meet the needs of the community.
How will this tax impact local businesses?
In two ways. First, a use tax puts local retailers and merchants on the same footing as out-of-state sellers by making taxes on remote transactions the same as local purchases. Second, businesses who file a state use tax return will also have to pay Clayton’s tax at the same time.
What is a local use tax?
A local use tax is a tax placed on untaxed goods purchased out of state for use in state. This tax is only paid by businesses and others who are already obligated to file a separate state use tax return on purchases of more than $2,000 worth of untaxed items from out-of-state such as computers, furniture, office equipment, etc. These who already have to pay this tax to the state would also pay Clayton’s portion.
As a resident will I pay the local use tax on items I purchase online or out-of-state?
If you paid sales tax on an online purchase then you do not need to pay the use tax. Many large online retailers such as Amazon and those that have physical stores in Missouri including Target and Apple publicly state that they charge buyers sales tax within the City of Clayton so no use tax would be due.
Is a local use tax charged in addition to sales tax?
No, local use tax will not be charged in addition to sales tax. Sales tax is for retail purchases within the state of Missouri or from vendors obligated to impose Missouri taxes, while the use tax is for purchases from out-of-state vendors that do not pay sales tax.
What goods are subject to the use tax?
Goods purchased out of state for which no sales tax has been paid are subject to the tax. There are exemptions for purchases for resale, manufacturing and nonprofits.
Who collects a use tax?
The state of Missouri and many other Missouri cities are collecting a local use tax.
How much revenue will this collect for the City?
It is anticipated the use tax will generate $215,000 per year in additional revenue.
What is the local use tax rate?
The voter approved rate that will be added for Clayton will be 1.5%.
What purchases are eligible for the local use tax?
You will need to pay the use tax if you buy more than $2,000 in untaxed merchandise a year from out-of-state vendors who did not collect sales tax.
How do I pay the local use tax?
Businesses typically file a use tax return with their sales tax. For individuals who made $2,000 or more in purchases, the State of Missouri relies on self-reporting. In most cases, if you are currently filing a use tax return, you would simply add the city portion. If you are not filing a use tax return, then you likely will not need to file one if the local use tax is implemented.
What will it look like on the ballot?
Clayton’s Prop. 1 will be the last item on the ballot. The ballot language will read:
Shall the City of Clayton be authorized to impose a local use tax at the same rate as the local sales tax by a vote of the governing body, provided that if any local sales tax is repealed, reduced or raised by voter approval, the respective local use tax shall also be repealed, reduced or raised by the same action? A use tax return shall not be required to be filed by persons whose purchases from out-of-state vendors do not in total exceed two thousand dollars in any calendar year.
This information was prepared and paid for by the City of Clayton, Mayor Harold Sanger, 10 N. Bemiston Avenue,
Clayton MO 63105. This information is intended solely to educate and inform residents about a question that
will be before voters. It is not intended to advocate, support or oppose the passage or defeat of the measure. Each
voter should vote for or against the question based on his or her own judgment.