The California sales tax rate will be slashed 1% across the state on July 1st. That is, unless the legislators pass another new sales tax law that will extend the heightened sales tax across the Golden State.
Gov. Jerry Brown is calling for such an extension, reports the Sacramento Bee. California is facing a huge $9.6 billion deficit, and the higher sales tax could help bridge the gap and fund programs.
Californian residents and businesses have been filling the brunt of the higher sales taxes for a while. In certain parts of California, the sales tax has been up to 10.25%, so the 1% reduction would result in a 9.25% sales tax rate.
The statewide sales tax essentially applies to any transactions within the state of California. The base sales tax in California is 8.25%, but many cities and counties have higher sales tax rates because they have added additional local and sales taxes to the 8.25% base. After July 1st, the base would be reduced to 7.25%.
Of course, not all legislators have agreed with Gov. Brown's assessment that the tax increase should stay in place. Others believe that a lower sales tax would help California's economy, be good for consumers, create jobs and assist businesses, reports YubaNet.
The Board of Equalization is now preparing to send out e-mails to about 680,000 California businesses and out-of-state businesses that make transactions in California about the new rate decrease, according to LA Weekly.
This means that California consumers may soon experience extra cash in their wallet - and extra cash to spend at retailers. The average household in California will now be saving an average of around $233 annually - no small amount, reports YubaNet.
Of course, if lawmakers pass an extension to the sales tax law, the California sales tax rate will remain at the heightened level. However, with the deadline for extension coming up, there may not be enough time for them to act on the extension.
- State sales, user tax to decrease to 7.25 percent (Imperial Valley Press)
- Sales and Use Tax (FindLaw)
- California Sales Tax Increase Takes Effect Today (FindLaw's Common Law)
- "Amazon Tax" for California? States Weigh Sales Tax Rules for Online Vendors Using In-State Marketers (FindLaw's Free Enterprise)