Now that our country is deep into a recession, all eyes are on the economy and making the right changes to fix our situation. All states are having financial trouble during these hard times, but California in particular is having some of the worst trouble.
So, effective April 1, California will initiate a 1 percent increase in sales tax.
This act is only a section of the state’s budget plan proposed by Gov. Arnold Schwarzenegger, which includes an increase on vehicle licensing fees, additional surcharge on state income taxes, elimination of two public holidays, and the widely publicized state worker furloughs.
It would seem easy to understand that in a time where money is tight, an increase in sales tax would not be a wise step.
The current statewide sales tax of 7.25 percent will rise to 8.25 percent, with certain counties being able to charge a higher rate. The sales tax rate in Los Angeles County will be 9.25 percent, while in San Bernardino and Orange counties the rate will be 8.75 percent.
With California currently holding the highest state sales tax in the nation, many retailers worry that the hike in the sales tax could lead buyers to look into other states or online for their shopping needs.
Additionally, high priced retailers like car dealers worry that the current trend of low sales will only get worse with the tax increase. Similar to the work furloughs, the sales tax increase is intended to be temporary. The bill passed last month proposes the increase to last until June of 2010, but voters will have a chance to extend the increase until June of 2012.
Although many Californians complain of the large increase, the sales tax increase is an alternative to cutting certain programs in California.
Unfortunately, the positive intentions of the sales tax increase are not very clear in the wake of hundreds of jobs furloughed and teachers given pink slips.
With the increase of unemployment and housing costs, it seems that California is trying its best to keep residents from saving any money in their wallets.
Although these increases are needed to keep organizations running, the clear result of progress is not evident and will probably not be evident for a while.
The coming year will hold some important sacrifices for residents and their government. While the financial sacrifices may be difficult, they are also necessary to help the state supply the services its residents need.