Online shopping has become much more prominent in recent years, and the general trend is that in-store shopping is decreasing steadily. The City of Buffalo must take advantage of funding sources to better capture consumer behavior.
Nationwide, e-commerce sales for the third quarter of 2024 was $300 billion. E-commerce sales accounted for 16.2% of total sales. With the rise in e-commerce, the City of Buffalo and Dallas County are seeing a slow decline in sales tax growth. To keep pace with this trend, the City of Buffalo and County must modernize its revenue sources to continue to provide the essential services our residents expect.
The City of Buffalo relies heavily on revenues from local sales tax to fund basic services, such as road maintenance and public safety.
Because the City of Buffalo does not currently have a Use Tax in place, the city has missed out on tax revenue due to online shopping.
What is a Use Tax?
A Use Tax is a local tax on goods purchased from out of state (most often online) for delivery to and use in the City of Buffalo.
Currently, the City of Buffalo collects a 1.5% local tax on all goods and services purchased from local businesses. However, that is not the case for purchases made online from out-of-state vendors.
For example, if a person purchases a piece of furniture at a store located here in Buffalo, the vendor collects a state and local sales tax on that item. However, if the same person purchased the same piece of furniture online from a vendor located outside the state of Missouri, the vendor is not required to collect the same local sales tax.
Many large online sellers already collect our state and local sales tax, so this would have no impact on those purchases. Those out-of-state and online sellers not collecting our local and state sales tax would collect and pay the Use Tax. There is already a state Use Tax in effect that is collected by the Missouri Department of Revenue. The Use Tax on the April 8, 2025 ballot would add the city portion for Buffalo and the county portion for Dallas County.
There is already a state Use Tax in effect that is collected by the Missouri Department of Revenue. The City of Buffalo does not collect these funds until a Use Tax is approved by the voters
If voters approve City Use Tax on April 8, 2025, a 1.5% local Use Tax would be collected on goods and services purchased from out-of-state vendors. The revenue generated from the Use Tax would be allocated in the same manner as the City and County’s local sales tax which funds for example: public safety, parks, streets and sidewalks.
The Use Tax rate would be the exact same as the resident’s local sales tax rate. Residents would never have to pay both use and sales tax on the same purchase.
I already pay sales tax, is this the same thing?
No. The sales tax applies to purchases made at retail within Missouri, while the Use Tax applies to purchases made from out-of-state vendors. Purchases cannot fall into both groups and therefore a purchase would not be taxed twice.
Why is a
Use Tax proposal by the City of Buffalo on the April ballot?
Over time, more and more purchases of goods, supplies and materials are shifting to out-of-state and online purchases rather than from our local retailers. The Use Tax will provide revenue for City services. The City must pass to collect, currently the City is not collecting any Use Tax.
What exactly is the Use Tax?
A Use Tax is a type of a sales tax placed on items purchased outside of Missouri or online but are for use in Missouri. This is not an additional 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.
Many large online sellers already collect our state and local sales tax, so this would have no impact on those purchases. Those out-of-state and online sellers not collecting our local and state sales tax would collect and pay the Use Tax. There is already a state Use Tax in effect that is collected by the Missouri Department of Revenue. The Use Tax on the April 8, 2025 ballot would add the city portion for Buffalo.
Does Missouri already have a Use Tax?
Yes. Missouri collects a 4.225% state Use Tax on out-of-state purchases, but Buffalo does not currently receive its local portion. Use Tax ballot measure allows Buffalo to collect Use Tax from online purchases.
Is this a double tax?
No. Purchases will either include the state and local sales tax, or the state and city Use Tax. No one will pay both. Most online sales already include local and state taxes, so this would not be an additional tax on those purchases.
How will this impact local retailers?
Buffalo/Dallas County’s local retailers collect sales taxes. While some out-of-state retailers collect our local sales tax, others do not. The Use Tax levels the playing field by ensuring that online and out-of-state businesses collect the same tax as local businesses. Without a Use Tax, online retailers have a price advantage over brick-and-mortar businesses in Buffalo. The Use Tax will subject all retail sales, in-state, out-of-state, and online purchases to the same tax rate.
Do other area cities collect the Use Tax?
The Use Tax has been approved by voters and therefore collected by many cities and counties through Missouri. More than 220 Missouri cities, including Rolla, Waynesville, St. Robert, Nixa, and Springfield, have already implemented a Use Tax to address this issue. As a reminder, there is already a state Use Tax in place. Residents of the City of Buffalo must vote to pass to collect the money collected by the State of Missouri.
What goods are subject to the City Use Tax?
The City Use Tax applies to any goods, supplies or materials purchased out-of-state by a business operating in Buffalo/Dallas County or a resident of Buffalo/Dallas County. Exemptions do exist for purchases for resale, manufacturing and not-for-profits. Most online sales already include local and state taxes, so this would not be an additional tax on those purchases.
What is the rate for the Use Tax?
The City Use Tax is applied at the same rate as the local sales tax. So out-of-state and online purchases would be subject to the tax rate that is collected by Buffalo retailers. Buyers either pay the local sales tax or the Use Tax — not both — and the rate will be the same and is currently 1.5%. If you spend $1000 dollars online in a year the Use Tax would be $15
How will the Use Tax funds be used?
As internet purchases increase, local revenues decrease. The Use Tax funds will go to general revenue for the City. Funds generated from the Use Tax can be used to pay for vital municipal services including Police, Parks, and Public Works services.
When is the election?
Election Day is Tuesday, April 8. The polls will be open from 6 a.m. to 7 p.m.
What will this look like on the ballot?
