Statewide sales tax hike takes effect

April 1, 2009 12:36:53 PM PDT
Today, everything from your restaurant breakfast to you department store purchase is going to cost more. That's because a new state sales tax takes effect to help balance the state budget. SIGN-UP: Get breaking news sent to you from ABC7 News

That extra penny per dollar can really add up. It will be a smaller daily pinch at stores all over the Bay Area. Say you go shopping at a Safeway for instance. Of course, food items are not taxed, but you spend $20 on other groceries. That will cost an extra 20 cents.

One taxpayers' group estimates the budget package will cost a family of four an additional $1,100 a year, largely canceling any benefit coming from federal tax cuts.

For the next two years this one-percent sales tax increase stays in effect, the deeper hit to the wallet will come when buying big-ticket items, like a computer, furniture and cars. On a $30,000 car for example, you would pay an extra $300 in tax. And when it comes to driving your car, the DMV fee to license it will nearly double beginning in May. Also, the personal income tax rate for 2009 is going up by a quarter-percent. All these new tax hikes come at the worst time possible for Californians who are struggling with rising unemployment, tumbling home prices, and lower stock values.

The one-percent sales tax hike is the biggest sales tax increase in 18 years and it will vary from county to county, ranging from 8.375 percent in Solano County to as high as 9.75 percent in Alameda County. People in Sonoma and Marin counties will see their sales tax jump by a total of 1.25 percent.

Cigarette-buyers should brace for significantly steeper prices starting today, because aside from the extra state sales tax, there is a new federal tax of 62 cents per pack which goes toward children's healthcare.

While the state hopes to generate more revenue, it may not happen so fast if people hold off spending on those big-ticket items, like cars.

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