REGIONAL REPORT : Sales Tax Hike Rings Up Confusing Day

Costa Mesa store manager Linda Seniff was already opening her change purse as yet another young customer approached the cash register Monday morning with gum and chocolate candy.

On any other day, the youngster’s two quarters would have been more than enough.

But Seniff had come prepared for the confusion this day would bring. And so, throwing a wink to her cashier, the manager of the Hanshaw Mini Market dropped four pennies of her own into the store’s register just to cover the “little ones.”

In Hollywood, a customer at World Book & News held a copy of Adweek in one hand and plunked down $2.50 with the other before he turned to walk away--only to have the store’s manager stop him in his tracks.

“That’s $2.71 with the new tax, sir,” manager Herschel Weisman said in a booming voice that rang around the outdoor newsstand and carried down the sidewalk.

“I had to actually stop him,” Weisman said after collecting the 21 extra cents. “And that’s the way it’s been happening all morning. This sucks. It’s terrible. It’s a pain in the butt. . . . One big hassle is all it is.”

Across Southern California, the combination of a general sales tax hike and its expansion to more products was greeted Monday by merchants and customers with confusion and anger. Merchants appeared annoyed with--and yet resigned to--the tax bite, saying it made life at the express lane more complicated. Consumers seemed bewildered and a bit frustrated at yet another Monday morning annoyance.

As part of a plan put together by Gov. Pete Wilson and the Legislature to erase a projected $14.3-billion deficit, the 6% basic statewide sales tax--unchanged since 1974 except for a temporary earthquake assessment--rose by 1.25 cents on each dollar.

Under the new rates, the sales tax in Orange, Riverside, San Bernardino and Santa Barbara counties rose to 7.75%, while in Los Angeles and San Diego counties the rate climbed to 8.25%. In Ventura and most other counties statewide, it rose to 7.25%.

And, for the first time, taxes were levied on a variety of previously untaxed items: candy, snacks, newspapers, periodicals, bottled water and the fuel used by aircraft and ships.

Also taking effect Monday were higher levies on beer, wine and liquor. Due Aug. 1 are higher motor vehicle license fees.

On Monday, it apparently all seemed a bit overwhelming.

“We’re still not used to this and we don’t like it,” said 73-year-old Buck Mason of Anaheim as he and his wife, Helen, browsed in gift shops at John Wayne Airport.

Harried callers, looking for answers, bombarded the State Board of Equalization, the state agency charged with collecting taxes.

“What we’re hearing is actually confusion about whether this goes into effect or not today,” said Delena Bratton, an agency spokeswoman in Sacramento.

Because legislators and the governor are still engaged in budget negotiations, many callers assumed the taxes had been put on hold, Bratton said. Wrong.

At least one business apparently was so eager to implement the new levies that it jumped the gun. A McDonald’s in Santa Monica charged the new rates briefly last Friday, sticking customers with an extra two cents--15 cents, instead of 13--on a $1.79 Big Mac.

“What was happening was not right,” said Bill Brahms, 39, of Santa Monica, who bought a Big Mac on Friday.

Anita Faunce, a senior marketing manager for McDonald’s Corp. in Woodland Hills, the food chain’s regional office, said a computer glitch caused the problem. “We do apologize,” she said.

Bratton, the Equalization Board spokeswoman, said the agency expects McDonald’s to do even more. A business that accidentally overcharges a tax must try to refund the difference to customers, she said. If customers do not come forward and the tax remains in the till, that cash goes to the state, she said.

Most Orange County residents interviewed Monday said the latest increase would not significantly change their buying habits.

“As long as it benefits us, we don’t mind,” 22-year-old Angel Zavala of Anaheim said after leaving a local 7-Eleven clutching a Big Gulp.

Christina Niven, 35, of Westminster said she was not bothered as long as the sales tax did not hike the cost of basic food staples.

“If it’s bread and butter, then I’d be upset,” Niven said outside a Westminster grocery store.

For merchants, there was wide confusion Monday over the complicated rules for the unprecedented “snack tax.”

Under the new law, “food” remains untaxed. But certain “snacks” are no longer defined as food, according to a 10-page document distributed in recent days by the Equalization Board, and are now subject to tax.

For instance, Ritz crackers are snacks. Saltine crackers are food, according to the board.

“It’s just been driving me crazy,” said Yousef Abudayyeh, owner of Uneeda Market & Deli in downtown San Diego. “I spent the whole weekend figuring it out.”

Abudayyeh said it was too messy and inconvenient to relabel products, so he did quick math at the register. A sign over the counter warned customers that the new state tax was in effect, “so get your pennies ready and keep on smiling.”

Most customers, however, either forgot about the tax or didn’t care, Abudayyeh said.

Not so at a 7-Eleven convenience store in Los Angeles’ Mid-Wilshire district, where a stream of customers complained about the tax tacked onto the price of candy, chips and other snacks.

“This is stupid. I’ve been buying gum all my life and never had to pay extra,” grumbled 9-year-old Royce Jobe, assessed a penny tax for the 5-cent piece of Bazooka bubble gum he bought. “I’m gonna bring my uncle in with me next time. He’s a lawyer.”

According to state officials, Royce should not have been charged a penny for his nickel gum. Taxes are presumed included in the price of items that are 6 cents or cheaper in Los Angeles County, said Glenn Bystrom, principal business tax auditor for the Board of Equalization.

In a mini-mart parking lot in Ventura, 15-year-old Heather Flemmings was also indignant. She held a couple of packs of gumballs and a candy stick, a small handful that cost 70 cents--tax included.

“I think this is stupid,” she said, as she looked down at her change. “I don’t think they should tax junk food because a lot of people buy it.”

Although unsure of the details, Primitibo Gomez, 15, of Stanton just knew the new taxes would cut into his weekly allowance of $15 he uses to buy snacks, basketball cards and parts for his bike.

“I don’t know,” Gomez said, “but it’s still too bad for me.”

Sorting the taxable from the non-taxable often fell to the retailers.

And it was no easy task, as Fazal Hussain, manager of the Mid-Wilshire 7-Eleven, discovered when he tried to make the distinction.

“Cookies--some are and some are not. I’m not sure which are which,” he said. “Some cereals are taxable and some are not. These cheese crackers are not taxable, I think. Nuts are taxable.”

According to state officials, however, cereals are exempt from the new tax. But cheese snack crackers are not exempt. Nuts are.

Meanwhile, at regional auto showrooms, furniture outlets and appliance stores, where thrift-minded consumers rushed the doors over the weekend to beat the tax hike, business fell severely Monday.

In Tustin, the Joe MacPherson Ford dealership reported that business was up by 25% over the weekend. But Monday, shoppers had not even arrived until late afternoon.

Times staff writers Aaron Curtiss, Janet Rae-Dupree, Peggy Lee, Hugo Martin and Thuan Le contributed to this report.