State rings up higher sales tax
By: Mike Aldax
AP
April 1, 2009
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| Budget injection: Crystal Millican shops Tuesday at Red Dot boutique on Chestnut Street. California is set to increase its sales tax to help offset a $42 billion deficit. (Cindy Chew/The Examiner) |
SAN FRANCISCO — The cost of your purchases today might appear a tad inflated — but don’t dupe yourself into thinking it’s some April Fools’ Day prank.
Today is the first day of a statewide 1 percent sales-tax increase that’s here to stay for at least two years. The temporary hike will affect most “hard-good” items, such as televisions, laptops, CDs and cars — almost anything except food, said Bill Dombrowski, president and CEO of the California Retailers Association.
The increase, expected to add revenue to state coffers, brings San Francisco’s sales tax to 9.5 percent. Consumers in San Mateo County will now pay 9.25 percent.
The tax increase was negotiated by state lawmakers to help remedy California’s $42 billion budget deficit. It is scheduled to end June 30, 2011, but would be extended an additional year should voters approve Proposition 1A in a special election May 19.
The tax hike is expected to pump about $1.19 billion into the state’s general fund this fiscal year and another $4.63 billion in 2009-10, according to state officials.
One might think the increase would have sent shoppers to Union Square in droves during the past week, but many folks are not opening their pocketbooks during the recession. On Tuesday, The City’s retail center was relatively calm — even for a weekday.
There were plenty of people carrying shopping bags, but not enough to jam sidewalks.
“The reality is, the retail climate is so poor right now, nobody’s out there spending discretionary money,” Dombrowski said.
Retailers and manufacturers fear the tax hike will further pinch consumer spending.
“We’ve got to get the state’s financial house in order,” Dombrowski said. “Until we do, nobody’s going to be feeling good about their jobs and nobody’s going to be spending money.”
Teyshawn Williams, 23, a construction worker from the Fillmore district, agreed with that assessment.
“I buy what I need, that’s it,” Williams said. “I’m working now, but I could be [laid off] tomorrow. It’s hard to know.”
Many residents said the biggest impact of the new sales tax will stunt “big” purchases like televisions and cars. Others suggested it would not have much of an effect on everyday purchases.
“I doubt a lot of people will notice,” said Jim Rusling, 54, of San Marin, who said he bought a new pair of tennis shoes Tuesday because it was his day off, not because it was the last day before the tax hike.
Besides a higher sales tax, the state will impose a 0.25 percent increase in the personal-income-tax rate in the 2009 and ’10 tax years and a 0.5 percent increase in fees to license vehicles from May until July 1, 2011.
