Opinion: Sales tax: 11.25%
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It seemed a little startling back in August to realize that, in some cities in Los Angeles County, sales taxes might soon reach 10.75%. But voters in South Gate already adopted a 1-cent sales tax increase, set to take effect Oct. 1, and residents of Pico Rivera and Maywood had identical tax hikes on the Nov. 4 ballot. Throw Measure R’s half-cent increase for the MTA, and a possible state 1-cent sales tax increase to pull California out of hock, and there you were - a $2 cup of coffee would cost $2.21. A $40 box of Pampers 160-count ‘Cruisers’ diapers would cost $44.30.
The state did not raise its tax, so it didn’t come to pass. Maywood voters rejected their tax increase. El Monte voters adopted theirs, but it’s only a half a cent. Pico Rivera’s one-cent tax passed (and perhaps it’s a good thing; the city had to scale back its 50th birthday party in August because of a $4.8 million budget deficit).
But now Gov. Arnold Schwarzenegger has plumbed the true depths of California’s budget mess and warns that the mere 1% sales tax increase floated a couple months ago will no longer do. He’s now asking for 1.5%.
So let’s add it up. The current base state sales tax is 6.25 cents on the dollar, plus another cent that the state turns over to local government, for a 7.25% sales tax up and down the state. Counties are allowed to add their two cents - literally. But in Los Angeles County, until now, we added on only another 1%. So today, if you buy coffee (served to you), Pampers, a copy of the Los Angeles Times (except out of a news box, but that’s another story) in this county, you pay 8.25%
Except in South Gate where, remember, the additional 1 cent on the dollar was added last month.
But starting Jan. 1, just when consumers will need a real break, they’ll have to add the new MTA tax. Now tack on Schwarzenegger’s 1.5%, and here you are - sales taxes in Los Angeles County will be 10.25%, except in El Monte, where they will be 10.75%, and in Pico Rivera and South Gate, where they will be an astonishing 11.25%
That means those $40 Pampers would now cost $45. Want a to be ready for the big digital TV switch? Tax on a $1,000 plasma big-screen would be $112.50. If you live in Pico Rivera and you want to buy a $20,000 car next year (or whenever the new state tax is to take effect), your sales taxes would be $600 higher than the $1,1650 you’d have to pay if you bought today.
Schwarzenegger’s critics worry that people making large purchases will shuttle across the Nevada, Arizona or Oregon borders, or perhaps to Indian reservations, to avoid the tax. And they may. But it is even more likely that shoppers will turn more than they already have to the Internet. There is a point at which the cost of shipping, especially with large purchases, is exceeded by the local sales tax on the same items at the corner store. So adding sales taxes to raise revenue could end up just driving shoppers away from the revenue-producing local business.
Of course, shoppers are legally required to pay their state sales taxes on their Internet orders. Show of hands - how many people add California sales taxes to their Amazon.com purchases?