NorCalSavant

With the ongoing recession things have not been looking too good for California’s budget.  With politicians entrenched in Legislature and ideological camps with safe gerrymandered seats, there has been no clear solution to matching state income with state expenses.  State Legislature and Governor Schwarzenegger have taken some half-hearted measures, although the problem seems far from being solved.

One of the measures state of California has adopted is to raise the sales tax by 1% starting April 1, 2009.  The total statewide base sales tax is now 8.25% up from 7.25%.  A breakdown of the base tax is shown here on this web page.  Special taxing districts formed by cities, counties, towns and communities levy additional local sales tax of up to 1%, adding to the base statewide sales tax.

In fact, the highest sales tax rate in California is 10.250% in Pico Rivera and South Gate in Los Angeles County from multiple taxing districts levying taxes in the same location.  In case you wonder why the tax rate is represented to three decimal places in California, it is because in some places the third decimal place is not zero.  Sanger in Fresno County, for example, has a sales tax rate of 9.725%.  Here is a California Board of Equalization web page providing current sales tax rates for all cities and counties in California.

How do these sales tax rates compare with the rest of the nation?  For an individual location, 10.25% seems to be the highest sales tax rate in the nation, which is also matched by Chicago.

This web page here provides basic statewide sales tax rate and the total average combined state and local sales tax rate data for all 50 states.  The total average combined sales tax in California is one of the highest in the nation.  Louisiana, Tennessee, and Washington are other states topping the list with highest average combined sales tax rates.  Delaware, Montana, New Hampshire, and Oregon have no state or local sales tax.  The total average combined sales tax rates are as low as 5% in Maine, Massachusetts, and Virginia in the 48 contiguous states.

Sales Tax Holidays

I also came across this excellent blog post by Bargaineering about state sales tax holidays which have been in place in many states starting this decade.  Thirteen states besides District of Columbia have declared sales tax holidays for 2009.  Of course, California has never been one of them.  The table below shows the sales tax holiday days and the restrictions applicable to the purchase.

2009 State Sales Tax Holidays

Source: Federation of Tax Administrators

(updated May 4, 2009)

* dates are for calendar year 2009, as of March 19, 2009. Some state have not published 2009 information on their website; old information may be provided in the links for these states.
** Holiday will only be allowed in years where the South Carolina Board of Economic Advisors certifies sufficient revenue growth.

Are the Sales Tax Holidays Worth It?

Sales tax holidays certainly appear to be a good time to wait to shop where possible.  In effect, shopping then is like shopping during sale, except every item of the kind, say clothing, would be on sale.

Talking of sales, there are sales galore all through the year.  I wonder if stores also have a sale during these holidays, so it becomes a real not-to-be-missed opportunity.  The sales tax holidays may not be such a good deal if you could only save on up to 10% of sales tax, but pay regular prices.  Clothing sales routinely include discounts from 25% to 50%.

Of course, when talking about discounts, some percent off a jacked up full price may be no bargain at all.  The only way to shop smart is to have a general idea about good price for an item before hand, and then compare the final discounted prices at different merchants to decide if the price is really a good deal.

Buying an item from an e-tailer on Internet could also be a good idea.  Depending upon your and the merchant’s location, buying items on Internet may not cost you any sales tax at all.

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