Why I'm voting 'no' on local use taxes

It simply strikes me as wrong that the way to level the playing field for local business is to punish people whose shopping choices we don't like by raising their taxes. For background, I owned and operated a technology business in Cape Girardeau for 20 years before selling it in 2007. My business provided computer-related products and services, primarily to other businesses, mostly outside of Cape Girardeau. Over the years, we collected many thousands of dollars in city and county sales taxes from other businesses outside of our immediate area.

We also faced competition from online vendors. Computer equipment suppliers were among the earliest online merchants. These vendors were in play in the computer industry when Amazon.com was just an online book store. We "leveled the playing field" against these vendors through good service, good advice and working hard to keep our prices competitive despite having to collect sales tax. I can truthfully say that online vendors' non-sales tax advantage had little, if any, negative impact on our business.

We did pay state use tax on equipment we bought from out-of-state vendors for use in our business. In most instances, these were specialized items not available locally. Had there been a city and/or county use tax, we would have been burdened with additional taxes and paperwork. If city and county use taxes are imposed, many small businesses as well as individuals spending over $2,000 per year out of state will now face the burden of new taxes and new compliance costs. Throw in a little Christmas shopping with other needs, and I suspect many individuals, not just businesses, will be caught by the $2,000 threshold.

I also would argue that not everyone who buys online does so to avoid sales tax. It is often a matter of convenience or need for an item that isn't available locally. Imposing a use tax will not necessarily deter folks from making those purchases. It will simply in the name of questionable fairness, punish those who need to or choose to purchase online or from an out-of-state vendor. Why is it when government at any level talks about fairness, it usually involves higher taxes?

Would it not be better to find ways to reduce the tax burden for local people and businesses? One city councilman proposed coupling a property tax reduction to the use tax, but it seems reducing a tax just doesn't get the same priority at city hall as raising one.

Here's another suggestion to help local business by trimming a tax.

When you make a purchase at a business that the city of Cape Girardeau classifies as a retail merchant, you are indirectly paying a hidden 1/10 of 1 percent tax on everything you buy including labor which is not otherwise subject to sales tax. This is the city's gross receipts annual business license tax. While it doesn't show on your sales receipt, the merchant has to build it into their pricing. It's ironic that the merchants who collect the city's lifeblood sales taxes take this extra hit.

Companies like banks, medical practices, law firms, wholesale distributors and manufacturers pay a flat fee often set decades ago that in today's dollars amounts to little more than petty cash. For example, a bank with a large facility and dozens of employees pays $40 per year where a small business with handful of employees and a $1 million in gross receipts pays $1,000 per year. If a new car dealer paid the same as a bank for their city business license, at the end of the year they could have a drawing from all the customers who bought cars and refund the purchase price to the winner. Now that would be an incentive to buy locally.

I won't deny that some folks will buy out of town to save on tax. However, in my opinion, the pending use tax proposal is more about protecting the tax entities than our merchants. This is evidenced by the one sidedness of tax increases on those who choose to shop elsewhere versus nothing being done to reduce the tax burden for citizens and businesses in the community.

Michael Buchanan lives in Cape Girardeau.