Local Option Economic Development Sales Tax

The Local Option Economic Development Sales Tax, approved by the Missouri General Assembly in 2005, allows citizens to authorize a supplemental sales tax dedicated exclusively for certain economic development initiatives in their home municipality. The state statute section governing this program is found at 67.1305 RSMo.  The voter-approved tax of not more than one half per cent is charged on all retail sales made in the municipality that are subject to sales taxes under Ch.144 RSMo.  Missouri statutes define “Municipality” as an incorporated city, town, village or county.

Use of Funds
Revenues generated by the tax may not be used for retail developments unless such retail projects are limited exclusively to the redevelopment of downtown areas and historic districts.  A portion of the revenues may be used for project administration, staff and facilities, and at least twenty per cent of the funds raised must be used for projects directly related to long-term economic preparation, such as land acquisition, installation of infrastructure for industrial or business parks, water and wastewater treatment capacity, street extensions and for matching state or federal grants related to such long-term projects.  Any remaining funds may also be used for marketing, training for advanced technology jobs, grants and loans to companies for employee training, equipment and infrastructure and other specified uses.

Responsibilities of the Local Governing Body and Economic Development Tax Board
The Local Option Sales Tax may not be imposed by any municipality without majority approval by voters of the municipality in a citywide, county or state general, primary or special election.  Upon voter approval, the governing body of the municipality establishes an Economic Development Tax Board to oversee project proposals, construction activities, and distribution of Local Option Sales Tax funds and to prepare required annual reports.  The members of the Board are not compensated and are appointed by the subject city and county governing bodies and by the school district(s) included within any economic development plan area funded by the Local Option Tax.

Effect on Other Local Special Taxing Districts
A municipality may choose to impose the Local Option Tax in addition to previously (or future) established other special taxing districts, such as a Tax Increment Financing, Neighborhood Improvement, Community Improvement or Transportation Development District.

Missouri’s Local Option Economic Development Sales Tax program provides citizens with another important tool to help create high quality, family supporting jobs, stimulate private investment and increase local revenues in their communities.

Business and Community Services
301 W. High Street, Rooms 720, 770  Jefferson City, Missouri 65102
Tel: 1-866-647-3633    Fax: 1-573-751-7384    Email: missouridevelopment@ded.mo.gov