Most will now pay 9 percent
Starting today, state sales tax in California is 6 percent. With added local sales tax from various regions in California, most Californians will now be paying about 9 percent sales tax.
Retailers are worried this could drag purchases of expensive items such as cars and furniture even further down.
Fuel to the fire?
The new higher sales tax means people in California will be paying one of the highest rates in the country. While the added funds should help California’s ailing budget, businesses and manufacturers worry that it will lengthen the recession.
At 9 percent, the sales tax on many big ticket items could be as big as the average payday loan.
All new taxes
Sales tax isn’t the only tax that is increasing in California this year. Personal income tax will also climb higher. Also, on top of the additional sales tax Californians will have to pay if they purchase vehicles, they’ll also face higher licensing fees.
Auto worries
With the auto industry already facing huge obstacles, California auto dealers are particularly panicked.
“There’s no doubt in my mind that our sales will go down because of this,” said Beau Boeckmann, vice president of Los Angeles-based Galpin Motors. “It’s an unfortunate truth. I hope the governor will reconsider doubling our car taxes. I think the sales tax is going to hurt us and the car tax can cripple us.”
The big picture
Governor Arnold Schwarzenegger signed the budget that contained the tax hikes as the state faced a $42 billion deficit. The tax hikes are expected to bring in $12.5 billion that will go toward closing that gap. The sales tax alone is expected to bring in $5.8 billion.
Kicking and screaming?
Another provision in the budget reduces the dependent care tax credit. Schwarzenegger’s finance team insists that the governor would not raise taxes without absolute necessity.
“Governor Schwarzenegger abhors taxes. Always has, always will,” said his finance spokesman, H.D. Palmer. “That said, you could not in his view close a record budget gap of $41.6 billion by cuts alone without decimating education and health care and other critical programs.”
Raising taxes is never a pleasant thing to contemplate, and it certainly isn’t pleasant if you have to deal with the consequences of paying them. That said, it was inevitable. The state had a shortfall of over $40 billion. You can’t beat that with spending cuts alone. As odious as taxation is, they do serve a purpose, and you can’t fulfill that purpose with cost cutting alone with that large a budget shortage. You have to increase revenue somehow.
You can’t cut the budget without “decimating” involuntary state bureaucrat run services? Has CA not yet discovered the concept of “privatization”?
They sure do understand the concept of “state welfare”, though.
Deport all the illegals and the state will have plenty of money.