California Sales Tax Set to Go Down 1 Percentage Point This Summer: L.A. City Could See 8.75 Percent Rate | The Informer | Los Angeles | Los Angeles News and Events | LA Weekly
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Economy

California Sales Tax Set to Go Down 1 Percentage Point This Summer: L.A. City Could See 8.75 Percent Rate

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Fri, May 20, 2011 at 2:19 PM

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California's massive budget deficit has shrunk by more than a third -- to Tom Cruise-size, about $10 billion -- thanks to unexpected income tax revenues.

But the taxpayer giveth and she also taketh away.

A 1 percentage point sales tax increase that went into effect in 2009 is set to expire. And if it does, you'll soon be paying a little less for stuff. On the flip side ...

... would erase a good portion of that $6.6 billion in extra revenue the Golden State just saw. In fact, it would cost the California budget $4.5 billion next fiscal year.

The reduced sales tax would go into effect July 1 unless the state legislature puts a stop to it in the name of keeping that cash.

In the city of L.A. the sales tax rate is 9.75 percent, so this would cut it down to 8.75. In some parts of the county the rate has been as high as 10.25 percent. Those areas would see a 9.25 percent tax.

Jerome E. Horton, chair of the Board of Equalization (BOE), says he's letting retailers across the state know about the new rates via 680,000 emails.

He states:

Unless the Legislature extends the tax rate increase before July 1, 2011, California retailers should adjust their calculation of sales tax. That failure to adjust their computers and registers for the reduced rate, will result in excess taxes being collected from California consumers.

To complicate things, Gov. Jerry Brown just revised his budget proposal for the July 1 fiscal year taking into account the extra, $6.6 billion -- but not the loss of sales taxes. It assumes that 1 percentage point will be renewed.

We'll see (he might have to go back to the drawing board).

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