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California facing a sales-tax decrease

August 2, 2010 - 3:51 pm

On Wednesday, the San Diego City Council is poised to put a measure on the November ballot that, if approved, would raise the local sales tax by a half cent. The increase wouldn’t be immediate; there’s a long list of reforms to the city’s financial system that would need to first be enacted. (Voiceofsandiego.org’s Liam Dillon has a nice run-down of the reforms here.)

So, let’s assume the reforms happen and the sales-tax increase is triggered. How much would you be paying on the dollar? Currently you’re paying 8.75 cents. Add to that a half cent and you get 9.25 cents, right? Not quite.

On April 1, 2009, California sales tax increased by 1 cent. The increase was temporary, meant to help close a budget gap. I just got off the phone with H.D. Palmer, spokesperson for the California Department of Finance, who confirmed that the 1-cent increase expires on June 30, 2011. If California voters had approved Prop. 1A in the May 19, 2009, special election, then the tax would have continued through June 30, 2012. But voters didn’t approve it; they squashed it. In other words, as of July 1, 2011, minus any local sales-tax increases, San Diegans will be paying 7.75 cents to the dollar. Should the so-called “Reform Before Revenue” ballot measure pass, we’ll be paying 8.25 cents to the dollar—less than what we’re paying right now.

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