Time running out on temporary sales tax increase

June 23, 2011 7:08:15 PM PDT
A fight over sales taxes is about to save Californians money, but cut into the state's bottom line. The battle is over extending an increase in the sales tax -- who would it help, who would it hurt.

Californians might want to postpone major purchases another week; the temporary 1 percent sales tax increase enacted two years ago is scheduled to expire at the end of the month.

The Board of Equalization has already told businesses to adjust their cash registers to reflect the decrease starting July 1.

"In many instances, retailers would have to call in a programmer and have a programmer actually makes changes to the cash register and all that takes time, coordination and effort," California Board of Equalization spokesperson Anita Gore said.

Because negotiations on the state budget are at a standstill, it appears more and more likely there will not be a deal in time to stop the tax decrease.

"Republicans have no plan on extending the taxes or voting for new taxes," Assembly Minority Leader Connie Conway said. "They will expire."

Gov. Jerry Brown, though, still has his hopes pinned on winning two Republican votes in each house to continue those temporary tax hikes -- what is known as "Plan A."

"This stuff changes, sometimes they blow hot, sometimes they blow cold; I'm not giving up," Brown said. "I'm going to keep working until we get those tax extensions and we will get them."

But with the lower sales tax rate around the corner, even Democrats see the writing on the wall.

"Is Plan A dead? I'll leave it to the governor to announce the wake and funeral services," Senate President Darrell Steinberg said.

If by chance, a budget deal could be reached by June 30 to keep the higher rate going, businesses could be in a lurch because their registers are already programmed to charge the lower sales tax. It would be impossible to change it back overnight.

"They are still going to be liable for the payment of the tax to the state, whether or not they collect it from the consumer," Gore said.

The Board of Equalization estimates the average California household will save $233 a year with the 1 percent decrease. But that means the state will have $4.5 billion less and Democrats say more cuts will have to be made to schools and public safety.


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