Mayor's Report

Jan 27

[ARCHIVED] Internet Sales Tax

The original item was published from January 27, 2020 12:15 PM to January 27, 2020 12:30 PM

In the summer of 2018, the State Legislature passed the Mississippi Infrastructure Modernization Act of 2018 which started the collection of sales taxes from internet transactions for the first time in Mississippi’s history.  At that time, Mississippi was one of only 7 states in the United States that was not collecting these taxes.  This law restored a level playing field from a pricing standpoint for local businesses that invest hundreds of thousands, and for some, millions of dollars in real estate and business personal property in our cities; and will also create a revenue stream to provide desperately-needed financial solutions for state, county, and city roads, bridges and other infrastructure.  

This law includes a formula which determines the amount of tax diversion back to local counties and cities as follows:

*70% of revenue is used for state roads and bridges

*15% of revenue is diverted to counties and must be used for infrastructure needs

*15% of revenue is diverted to municipalities and must also be used for infrastructure needs.  Distributions to cities are determined as follows:  $3 million is distributed equally to every city in the state, which equates to about $10,033 each with the remaining funds distributed based on population % and generated sales tax revenue % as compared to the state as a whole.   The initial diversions are done in phases with 2020 netting 25% of total calculations, 2021-50%, 2022-75%, and all future years providing 100% of the revenues derived by this formula.

Specifically to Southaven, our city is one of the largest producers of sales tax revenue in Mississippi and projects receipts to total approximately $1.8 million annually starting in 2023.  We received our first diversion from the state recently in the amount of $198,446.77 and will receive one more for 2020 in July for this same amount.  Our Board of Aldermen voted in favor of my recommendation to place all of this money into our street improvement line of our general fund budget.  This additional funding will make a significant difference in our already-aggressive plan to improve street conditions throughout our city.

Finally, I commend our state legislators on a great decision which will address one of Mississippi’s largest problems that has created tremendous opportunity costs for our state, transportation infrastructure.  I also commend and thank them for returning funding locally where it is generated and for the fair diversion formula which will benefit every city throughout our state.