Your California Sales Tax Update

California’s state sales tax is going up by 1 percent–a penny on the dollar — at midnight tonight. That’s part of the deal the governor and Legislature struck to try to deal with our $40 billion (or is it $50 billion?) budget deficit. We didn’t manage to go out and buy anything major, like a car, semi tractor, or fusion-powered Water-Pik, that would have prompted self-congratulations for dodging the state’s nefarious revenue schemes.

The Associated Press and some other news services are saying the tax is increasing from 5 percent to 6 percent. That’s news to the millions who pay the tax and to the state Board of Equalization, the agency that makes sure the tax is collected. The board says the “total statewide base sales/use tax” is 7.25 percent. And checking county to county and town to town, that appears to be the minimum charged anywhere in the state. The highest rate charged, and remember it is about to go up, is 9.25 percent.

So what gives? Why the discrepancy between the news organs and the state bureaucrats and what shoppers up and down the state know?

Well, the sales tax is complex. Due to past budget crises and efforts to ensure local governments–and police and fire services, and transportation projects, have a more reliable source of funding–supplemental levies have been added to the sales tax. Currently, a nickel of tax for every dollar spent on a non-grocery item goes into the state general fund, where in theory it can be spent on anything. The extra penny of tax that goes into effect tonight will bring that general fund portion of the tax to 6 percent. So that’s what the media are talking about.

But then you need to start adding in the supplemental levies:

–An 0.25 levy that went into effect July 1, 2004, that goes to a “fiscal recovery fund.”
–An 0.50 percent levy that goes to a local revenue fund.
–An 0.5 percent levy passed by the voters for a local public safety fund.
–A 1 percent levy, effective July 1, 2004, dedicated to county transportation projects and county and city operations.

After midnight, adding the 6 percent to the General Fund and the various other levies equals 8.25 percent.

On top of that, many counties and cities have added their own sales taxes. San Francisco charges .5 percent for the Bay Area Rapid Transit system (as do most of the other Bay Area counties), .5 percent for the county transportation authority, and .25 percent for a “public finance authority.” The total sales tax in the city is rising to 9.5 percent. In Alameda County, where I live, sales tax will hit 9.75 percent.

Two Los Angeles County towns appear to share honors for the highest sales tax rate in the state: South Gate and Pico Rivera both charge 10.25 percent as of midnight.

Here’s the Board of Equalization’s detailed breakdown of state sales and use taxes: http://www.boe.ca.gov/news/sp111500att.htm

Here’s a list of all the jurisdictions in the state and the sales taxes effective 4/1/2009: http://www.boe.ca.gov/sutax/pdf/Pending_Rates-4-09.pdf

And a historical note: The Board of Equalization includes a little table that recaps the history of the California sales tax. Interesting to see the state instituted the tax in 1933, also known as hard times. If I had more time, I’d delve a little into the political back-and-forth that must have accompanied that move.

Also interesting to note, at least by way of contrast, the sales tax in Oregon today: still nada.

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