If Lake Ozark residents approve a Use Tax on out-of-state online purchases, areas of Bagnell Dam Blvd. would be rebuilt as part of a massive street improvement program.

Use Tax would help Lake Ozark begin making street improvements

It’s estimated that as much as 12 percent of all retail purchases made this year will be made online – and that is expected to grow as consumers become more familiar with the Internet.

Unfortunately, the city of Lake Ozark does not capture any of the sales tax on those out-of-state online purchases -- purchases that were often previously made at the city’s brick-and-mortar stores. Out-of-state vendors pay the Missouri sales tax of 4.225 percent only if retailers have a physical presence in Missouri, but they don’t pay a local sales use tax. That puts local businesses at a competitive disadvantage.

According to recent Missouri Municipal League estimates, that means the city of Lake Ozark is losing an estimated $134,000 a year in uncaptured sales tax revenue – money that could be used to help improve the city’s aging road system.

Now, Lake Ozark residents have a chance to bring those out-of-state tax dollars home and help strengthen the city’s transportation infrastructure.

Voters will be asked April 7 as a part of the General Municipal Election to approve the imposition of a local sales use tax on out-of-state purchases at the same rate as the current Lake Ozark sales tax of 2.75 percent. Aldermen unanimously voted recently to place the issue on the ballot.

The use tax has been identified by the Lake Ozark Citizens Advisory Committee as one of the funding sources that could be used for transportation system improvements. 

“It won’t pay 100 percent of improvements, but will pay chunk of it,” City Administrator Dave Van Dee noted.

Funds raised after the road improvements are made would be used to sustain the street program.

“Once the street improvement needs are met, funds raised by the use tax would be used to maintain the streets and build a balance for future needs,” Mayor Gerry Murawski explained.

According to city officials, approval of the use tax is especially important since the city recently learned it did not qualify for a matching $3 million Governor’s Cost Share Grant for transportation. The city’s share would have been $1.5 million.

Van Dee stressed that this is not an additional local sales tax. Purchases made locally at Lake Ozark businesses will not be subject to the use tax. It only applies to out-of-state purchases made by Missouri – and in this case Lake Ozark – residents from out-of-state vendors. The use tax is applied to the same type of products that are subject to sales tax paid at the local level.

A sales use tax is imposed on where goods and purchases are used as opposed to traditional sales tax which is imposed at the point of sale (a store’s cash register.)

More than 200 Missouri municipalities currently have a use tax on file.


Qualifying purchases

Purchases that may be subject to use tax include, according to the Missouri Department of Revenue:

•Mail-order supply purchases

•Furniture and equipment purchased from out-of-state sellers

•Purchases of goods bought over the Internet

•Purchases of goods bought over the telephone

•Cross-border purchases of goods

•Catalog purchases

•Magazine subscriptions

•TV marketing purchases

•Computer software and hardware purchases

The use tax does not apply if:

•You make a purchase from a Missouri retailer and pay to Missouri sales tax to the seller; or

•You make a purchase from an out-of-state seller and you pay Missouri use tax to the seller.


Road improvements

The condition of Lake Ozark streets – especial Bagnell Dam Blvd. – has been the concern of city officials and residents for years. The challenge is where to find funding to pay for an estimated $6 million in improvements if all of the streets are upgraded. 

Also on the April 7 ballot will be a referendum asking voter approval of up to $6 million in debt for improvements to the city’s transportation system. This is based on a 2019 Road Assessment survey by Cochran Engineering, which has offices in Osage Beach and several other Missouri communities. 

According to state statute, a city cannot incur debt without the approval of voters. Approval of the ordinance does not obligate the city for any specific project but allows officials to begin the process of identifying needs and formulating a plan to meet those needs. Board approval is required before any specific projects can begin or any contracts are approved.

The Citizens Committee has identified options for implementing the improvements. One of the options is the use tax, which would be earmarked specifically for transportation infrastructure improvements. 


Online Sales Source: U.S. Census Bureau, https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf