City Council Minutes 2006 08 01 - Laserfiche WebLink

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City Council Meeting Minutes August 1,2006 Page 5 of 12 RESOLUTION No. 33, SERIES 2006 - A RESOLUTION REFERRING TO A VOTE OF THE REGISTERED ELECTORS OF THE CITY OF LOUISVILLE AT THE NOVEMBER 7,2006, SPECIAL MUNICIPAL ELECTION A TABOR BALLOT ISSUE TO AUTHORIZE THE IMPOSITION OF THE CITY'S USE TAX, CURRENTL Y COLLECTED UPON VEHICLES AND NONRESIDENTIAL CONSTRUCTION AND BUILDING MATERIALS, UPON THE USE, STORAGE, DISTRIBUTION OR CONSUMPTION OF ANY SERVICES OR ANY ARTICLE OF TANGIBLE PERSONAL PROPERTY, INCLUDING BUT NOT LIMITED TO CONSTRUCTION AND BUILDING MATERIALS USED IN CONNECTION WITH NEW RESIDENTIAL CONSTRUCTION OR NEW RESIDENTIAL BUILDING PROJECTS, THAT ARE PURCHASED, LEASED OR RENTED FROM SOURCES INSIDE OR OUTSIDE THE CITY Mayor Pro Tem Brown requested a Staff presentation. Finance Director Leslie explained the City of Louisville, sales tax comprises 36% of the city's total revenue source, 4% is collected in use tax. Current use tax for Louisville is collected on automobiles and commercial building materials only, and not on the same items as are subject to sales tax. Louisville does not collect use tax due on tangible personal property withdrawn from inventory for business or personal use or on items purchased without payment of sales tax or on building materials used in new residential construction. This type of use tax is typically collected on the privilege of storing, using, or consuming tangible personal property in Colorado purchased at retail but not required to be taxed. Use tax is not imposed on sales subject to the sales tax. When Louisville adopted its Home Rule Charter in 2002, a use tax on tangible personal property was not adopted. Use tax is the reciprocal of sales tax, not an additional tax. Use tax is collected or due from the consumer when the provider or seller of tangible personal property or services does not charge sales tax. In Colorado, sellers are exempt from collecting local sales tax when they do not have a business presence, or nexus, within the local city. This factor allows, and in most cases encourages, citizens and businesses to purchase goods from outside the city, for delivery into the City without payment of local tax. Based on the average of 5% of sales tax collections, the City of Louisville forfeits approximately $500,000 - $1,000,000 of consumer use tax revenue per year. The Resolution sets the ballot question to the registered electors of the City to vote on the adoption of a use tax on the November 7, 2006 ballot; states the 3-3/8% tax rate will be allocated to the City's Funds in the same manner as the sales tax, and authorizes the imposition of the City's use tax to be collected on the following: . The use, storage, distribution or consumption of any article of tangible personal property or services purchased, leased or rented from sources inside or outside the City, on which the City sales tax has not been paid.