Sales Tax Increase?

Anytime something happens on
April Fool’s, one must be suspicious: Was it a prank? An excellently-timed
joke, planned just in time for that most merrymaking of days?

In the case of California’s
sales tax, it was no joke. On Wednesday, April 1, the California state
sales tax officially went up one percent, to a nice, round six percent.
And for certain counties with already-high sales tax rates, this bumps
it up to closer to nine percent.

The sales tax increase is one
leg of the governor’s plan to balance the rather defunct state budget.
It was (optimistically) estimated that the temporary sales tax increase
would bring in well over $10 billion in additional state revenue. The
budget balancing plan, put in place to solve the more-than $40 billion
state deficit, relies on a nearly 50-50 split between spending cuts
and tax increases.

As of right now, the “temporary”
sales tax fix will only run through for the next two and a half years
(July 2011), though if the governor is victorious in his quest to get
Proposition A1, the Budget Stabilization Act, passed, the elevated sales
tax will remain in place for one additional year, through July 2012.
The election to decide on this and other measures, will take place on
May 19. (In addition to the sales tax increase, personal income tax
rates will also rise, in addition to vehicle licensing fees, just like
former Governor Davis proposed, before being ousted in a special election.)

Depending on where you live,
one percent, particularly on more expensive items, makes a big difference.

Don’t be surprised to hear about more inter-city and inter-county
shopping, as residents of higher sales tax area mosey over to the cities
with lower penalties, er, taxes.

To figure out whether or not you should
shop in your own city or in the town over, here is a simple trick: find
out what your city/county taxation rate is. Then, locate the nearest
city to you with a tax rate that is lower. Estimate what you might be
spending on a particular shopping trip (say you are looking to remodel),
and see how much more you are spending in the city with the higher sales
tax rate. Then, go ahead and save that money by shopping in the less
expensive locale. Hey, maybe the sales tax rate with actually help cities
with lower sales tax rates! Oh, that’s right, that would mean the
other cities are getting the short end of the stick.

The California
State Board of Equilization has provided a link by which consumers can
check their new
local sales tax rates
The county with the highest sales tax rates is Alameda, at 9.75%. Surprisingly,
San Francisco is not the most expensive county in which it shop, as
its new total sales tax rate is 9.5%. Counties with the highest sales
tax rate are Los Angeles (at 9.5%), Contra Costa, San Mateo and Santa
Clara (all three at 9.25%), Santa Cruz (9%), Sonoma (9%),

Marin (9%) and Fresno (8.975%).

The cities with the highest
sales tax rates are in Pico Rivera and the City of South Gate (10.25%),
Avalon (9.75%), El Monte (9.75%), Inglewood (9.75%), National City (9.75%),
El Cajon (9.75%), Richmond (9.75%), Pinole (9.75%), El Cerrito (9.75%),
Sanger (9.725%), La Mesa (9.5%), Dinuba (9.5%), Santa Cruz (9.5%), Campbell
(9.5%), Selma (9.475%) and Reedley (9.475%).

The particular cities with
the lowest sales tax rates are Eureka (8.5%), Placerville (8.5%), though
many cities (and counties) are currently operating at an 8.75% sales
tax rate, including, notably, Santa Barbara, West Sacramento, Oxnard,
Pismo Beach, the City of San Luis Obispo, Fort Bragg, Salinas, Riverside
County, San Diego County, Orange County and Mariposa County.

The counties with the lowest
total sales tax rates are San Luis Obispo, Monterey, Merced, Mendocino,
Shasta, Sierra, Siskiyou, Sutter, Glenn, El Dorado, Calaveras (jumping
frogs!), Alpine, Butte, Colusa, Del Norte, Kern, Kings, Lake, Lassen,
San Benito, Plumas, Placer, Mono, Modoc, Tehama, Trinity, Tuolumne,
Ventura, Yolo and Yuba, all at 8.25%, followed closely by Stanislaus
and Solano, at 8.375%.

Some experts have already expressed
concern that the elevated levels of taxation will in fact, do more harm
than good, particularly in the midst of the current stinging recession,
which has hit California hard. It’s basic economics: when people have
less money, they’re more apt to save it.

Increasing taxes, in a recession,
has never been a brilliant move, and never will be.