Sales and use taxes in California are among the highest in the United States and enforced by the state and by local governments. Sales tax is regressive. Local sales tax increases also create geographic variations in sales tax rates that can put local businesses at competitive disadvantages. Poor families pay almost eight times more of their income in sales tax than the best families. Increased local sales tax rates also create geographic variations in sales tax rates that can put local businesses at an unfavorable position.
Video Sales and use taxes in California
Sales tax rate
With 7.25%, California has the highest all-time highest sales tax rate in the United States, which can reach up to 10.25% with local sales tax included. Since January 1, 2017, the static sales tax rate decreased from 7.50% to 7.25% as a result of the end of a statewide sales increase under the 30th Proposition approved by California voters in November 2012.
Some claimed high sales tax rates partially compensate for the decline in property tax revenues resulting from Proposition 13 that California voters approved in June 1978. However, others pointed out that, in most districts (all except rural districts), the current property tax revenues is higher than the year before Proposition 13 passes, even after adjusting for inflation and population growth.
Sales and use taxes in California (state and local) are collected by the California Department of Tax and Administration Fee, while income and franchise taxes are collected by the Franchise Tax Council.
A statewide sale tax rate of 7.25% is allocated as follows:
- 7.25% - Local Country
- 6.00% - Country
- 3.9375% - Country - General Fund
- 0.50% - State - Local Public Safety Fund
- 0.50% - Country - Local Revenue Fund for local health and social services
- 1.0625% - Country - Local Revenue Fund (2011)
- 1.25% - Uniform Local Tax
- 0.25% - Local County - Transportation Fund
- 1.00% - Local City/District - Operational Fund
- 6.00% - Country
California-wide sales tax was first imposed on August 1, 1933, at a rate of 2.50% under "Retail Sales Act of 1933." No local sales tax was levied at the time. In an editorial dated September 5, 1933, the Los Angeles Times criticized the 2.50% sales tax rate by stating that "the sales tax rate should not exceed 1 percent" and that the tax rate is "so high that it hinders the business, which will make the tax less productive. "
Additional local sales tax
Additional local sales taxes may be added by towns, districts, service authorities, and special districts (such as the Bay Area Rapid Transit district). Local sales taxes for transportation purposes are very popular in California. Additional local sales tax collected by districts and municipalities is officially called "District Tax." The effect of the local sales tax is that the sales tax rate varies in California from 7.25% (in areas where no additional local sales tax is charged) up to 10.25%. For example, the city of Sacramento, the state capital, has a combined sales tax rate of 8.25%, and Los Angeles, the largest city in California, has a combined sales tax rate of 9.50%.
Local sales tax rate limits
The combined tax rate of all local sales taxes in any area is generally not allowed to exceed 2.00 percent. However, this is a California law and legislative restriction on a routine basis allowing local governments, through the implementation of separate legislation, to exceed the local tariff tax rate of 2.00 percent. Local tax rate limit of 2.00 percent exceeded in any city with combined sales tax rate of more than 9.25% (statewide tax rate of 7.25% plus 2.00% tax rate limit). Starting April 1, 2018, all Los Angeles County and 7 other California cities (Albany (Alameda County), El Cerrito (Contra Costa County), Greenfield (Monterey County), Hayward (Alameda County), Newark ( Alameda County), San Leandro (Alameda County), and Union City (Alameda County)) have a combined sales tax rate of more than 2.00 percent local tax rate limits.
SB 566 (2003) and local sales tax increase increased
The amount of local sales taxes greatly increased following the passing of SB 566 in 2003. SB 566 formally authorized all California cities to levy additional local sales taxes. SB 566 also increases the maximum combined local sales tax rate (local sales tax rate limits) that local governments may collect from 1.50% to 2.00% today. Since April 1, 2017, 176 cities and 32 districts have agreed to increase local sales taxes. Not only did the local city sales tax increase amount exploded since the SB 566 trip, but the huge increase in sales taxes (as measured by the increase in sales tax rates) also increased significantly as more cities were looking for greater sales tax rates to increase. During the November 2016 election, approximately 65 additional local sales tax actions were approved by voters in California. These local sales tax measures generally come into effect on April 1, 2017.
The language of SB 566 which authorized the city to levy local sales taxes inserted towards the end of the legislative session without regular public scrutiny, was approved by a political partisan vote, and signed into law by former California Governor Gray Davis after the election in which he was called from office.
Cities with at least 10.00% combined sales tax rate
Since April 1, 2018, 15 cities in California (all in Los Angeles County) have a combined sales tax rate of at least 10.00%:
Effective January 1, 2017, the sales tax rate throughout California state decreased 0.25% as a result of the end of a temporary sales tax increase under Proposition 30 approved by California voters during the November 2012 election. However, many local sales tax actions were approved by voters during the November 2016 election, and the increase in sales tax generally became operational on April 1, 2017.
The Los Angeles County sales tax rate increased July 1, 2017
On July 1, 2017, an increase in the Los Angeles County transportation sales tax of 0.50% was approved by local voters during the November 2016 election to take effect. The combined sales tax rate in Los Angeles County increased from 8.75% to 9.25% in all areas unrelated to the county and all cities within the county except those cities where previous voters approved a local sales tax increase that had higher combined sales tax rate.
The Los Angeles County sales tax rate increased October 1, 2017
On October 1, 2017, a 0.25% increase in Los Angeles County's homeless service/service tax program was approved by voters during March 7, 2017 in an election. The combined sales tax rate in Los Angeles County increased from 9.25% to 9.50% in all unrelated territory in the county and all cities within the county except for those cities where previous voters approved a local rate of sales tax increase higher combined sales tax.
A 0.25% increase in sales tax is currently not collected in six cities in Los Angeles County where aggregate sales tax rates are not 0.25 percent or more below the valid local tax rate limits. The six cities, which have a combined sales tax rate of 10.25%, are Compton, Long Beach, Lynwood, Pico Rivera, Santa Monica, and South Gate. However, if the sales tax rate for one city ends or is deducted while the sales tax increase of the homepage program/service is in effect, the sales tax of the homeless program/service will soon become an operation in the city. That's what happened in the city of La Mirada from April 1, 2018.
City with highest combined sales tax rate by county
Beginning April 1, 2018, the following cities in California have the highest combined sales tax rate in each of the 58 counties in California:
Local sales tax is subject to voter approval under Proposition 218
All local sales taxes are subject to voter approval under Proposition 218 (the "Right to Eliminate Tax Laws") that California's voters approved in November 1996. Whether simple voter approval or two-thirds of voter approval is required depends on the type of sales tax levied and type of local government impose sales tax.
General unrestricted sales tax is subject to majority vote approval by local voters. General sales taxes may be used by local politicians for general government purposes, including civil service salaries and benefits. General sales tax decision decisions are made after taxes by local politicians as part of the regular annual local government budget process. Some local governments may engage in general sales tax violations in an attempt to circumvent the two-thirds of the prevailing terms of the special sales tax.
Special sales taxes dedicated to one or more specific destinations must be approved by two-thirds of the votes from local voters. Any sales tax imposed by a local government other than a city or county (for example, a special district such as a local transport agent) should be a special tax subject to two-thirds of the vote approval by local voters.
Proposition 218 does not officially authorize local governments to levy sales taxes. The legal authority to levy local sales taxes must come from state law. Two-thirds of the votes of all legislative members of the local government are usually required before local sales tax actions can be granted to voters in the election.
Relationship between sales tax increment and cost of public employees
The driving force behind many local sales tax increases is the skyrocketing cost of public pensions and the health care of retired employees. Studies have shown that local sales tax increases are concentrated in California areas that have the biggest pension problem.
In an effort to increase local sales tax chances, some local governments are involved in budget games where they place sales tax on ballot papers to help fund popular political services (eg, public safety), and if sales tax payments, this allows local governments to freeing other existing taxpayers' funds which can then be spent on less politically popular items such as high salaries and civil service allowances.
County transportation taxes
Sales tax for transportation is very popular in California. However, transport sales taxes are regressive and also shift the financial basis of the transportation system from user fees to taxes paid by all taxpayers regardless of their direct dependence on the transport system. District sales taxes are normally supported (including with significant campaign contributions) by interest groups that disproportionately benefit from taxes, including local business communities, the construction industry, real estate developers, and public unions. Several districts have passed some transportation sales tax increments such as Los Angeles County that have exceeded four-fold transportation sales taxes with a combined rate of 2.0%. County transport sales taxes generally do not include traffic performance standards that actually require better traffic conditions.
Sales taxpayer tool
As part of its series of "Taxpayer" series publications, the Taxpayer Association Howard Jarvis has released a publication to assist voters and taxpayers about local sales tax measures placed at a vote by the local government in California.
Local government data in sales tax selection
It is often helpful for voters to have financial data on local governments that propose sales taxes so that voters can make more informed voting decisions about the benefits and needs of sales tax. Much of the financial data on local government can be obtained directly from the local government itself. Additional information that may benefit voters includes data on salaries and civil servant benefits (in particular pension data), and annual budget and financial reports. The priority of local government budget spending, as reflected in recent budget data, can be very helpful in sales tax elections in which local politicians decide how to spend on sales tax proceeds.
Extensive public data sources outside of the local government are also available to voters in connection with local sales tax elections.
Local government issues related to the selection of sales taxes (eg, local government "information" campaigns and impartial voting questions) may affect the integrity and fairness of the electoral process. Voter/taxpayer issues related to local sales tax elections (for example, cumulative tax burdens and precedents) can have an impact on individual voter decision-making processes and election results. Opposition support and campaigns in local sales tax elections may also affect election results.
Redeem local sales tax or withdrawal using Proposition 218
Proposition 218 ("The Right to Choose Tax Law") is an amendment to the 1996 initiative approved by California voters. Proposition 218 includes provisions that constitutionally retain to local voters the right to use the power of initiatives to reduce or withdraw local taxes, assessments, fees or fees, including provisions for significantly reduced petition signature requirements to meet the requirements of the letter sound. Local sales taxes, including sales taxes previously approved by local voters, can generally be reduced or revoked using the strength of local initiatives under Proposition 218.
Examples where local sales tax deductions or revocations may be appropriate include where there is significant waste or mismanagement of local sales tax revenues, when there is a controversial or questionable sales tax spending by the local government (in particular where sales tax proceeds are used to pay salaries and/or excessive employee benefits such as retirement), when the quality of programs and services financed from the sales tax is not at the high level expected by voters, when local sales tax rates are too high or unreasonable (especially in situations where sales tax increases locales are significantly narrowly approved by voters), or when promises made earlier by local politicians about local sales taxes are broken after voters' approval of tax sales (especially in situations where local politicians make no binding promises um on general sales expenditures t ax axes that are not legally restricted for a particular purpose).
Local sales tax used to pay bonds is a situation that is legally more complicated because the problem of decreasing federal contracts may preclude the implementation of local initiative forces under Proposition 218. Transportation taxes approved by local voters often include at least a portion of the proceeds of taxes to repay bonds. Advice from legal advisors is usually required in situations where bonds have been issued and sales tax revenues have pledged to repay bonds. The local compensation initiative under Proposition 218 is an alternative option when contract construction issues are present.
Recent statewide sales increase
Current statewide sales increases include:
- From April 1, 2009 to June 30, 2011, state sales and usage taxes increased by 1% from 7.25% to 8.25% as a result of California's budget crisis of fiscal year 2008-2009.
- Effective January 1, 2013, state sales and usage taxes increased 0.25% from 7.25% to 7.50% as a result of Proposition 30 passed by California voters in the November 6 election of 2012. The change is a temporary increase in taxation of four year ending December 31, 2016.
Maps Sales and use taxes in California
Online sales tax
Starting July 1, 2011, California implements sales taxes for online retailers. It is the responsibility of the reseller to collect the state sales tax on all purchases made in (or delivered to) California wherever the retailer/supplier is located. This sales tax levy is governed through negotiations between the governor, Jerry Brown, and the major online retailers such as Amazon. This is usually referred to as the "Amazon deal." Prior to this deal, Amazon, and others, remained physically outside the state (the law of communications) to deal with sales tax laws as they were written and interpreted before the deal brokered, while now Amazon and others have many warehouses, offices, and research locations in the state of California, thereby contributing to the overall California economy.
Earlier Assemblywoman Nancy Skinner of Berkeley twice introduced a law to apply sales tax to online retailers such as Amazon.com only to have the bill vetoed by the governor. On January 19, 2011 Skinner introduced similar legislation in the form of AB153. Because the political strife of this bill never reached the law but the above "agreement" was mediated by the governor. The bill will require online sellers outside the state with affiliates in California to collect sales taxes on purchases made by citizens. Affiliate provisions are entered to ensure that only sellers with California's tax-imposed nexus, as required by federal law and US Supreme Court decisions at Quill Corp v. North Dakota.
Exceptions
In general, sales taxes are required for all real personal property purchases to the primary consumer. The service is not subject to sales tax (but may be subject to other taxes), although some politicians would like to extend the sales tax to the service. Liability for sales tax is attached to the seller, not the buyer; but the seller is permitted by law to collect taxes from the buyer (and if the seller does so, the buyer is obliged to pay).
Vehicle purchases are taxed by city and district where the buyer registers the vehicle, and not in the area where the vehicle was purchased. Therefore there is no advantage in buying a car in a cheaper area to save on sales tax (a one percent difference in the sales tax rate would otherwise result in an additional $ 300 loss on a $ 30,000 car).
In grocery stores, unprepared food items are not taxed but vitamins and all other items. Fast food, whether sold by supermarkets or other vendors, is taxed. Restaurant bill is taxable. As an exception, hot drinks and bread are tax free if and only if they are to be brought home and not sold with other hot foods. If consumed at the seller's premises, such items are taxed like restaurant food. All other foods are exempt from sales tax.
Excluded are food animals (cattle), food crops and grains, fertilizers used for food cultivation, prescribed medicines and certain medical supplies, energy utilities, certain alternative energy devices and supplies, art to be exhibited by body- public bodies, and veteran pins. There are many exceptions specific to veteran, nonprofit, educational, religious, and youth organizations. Sale of goods to foreign countries or certain national entities (mostly transportation companies) is exempted, as are some items sold in transit through California to foreign destinations.
The occasional or one-time sale is not part of the ordinary business excepted that except the sale of three or more non-food animals (puppies, kittens, etc.) per year is taxed.
There are also exceptions for certain products, ranging from telephone lines and poles, to petroleum gas to agricultural machinery, coins, to public transport vehicles. There are partial exceptions for varied items such as horse breeding horses, teleproduction equipment, agricultural machinery, and logging equipment. For a list of organized exceptions, with estimates for how much income the country loses and people save for each, see Publication 61 Equalization Council.
Sales taxes are charged on gasoline. Taxes are levied on federal and state excise taxes and excise taxes, resulting in a "double tax" form. Sales tax is included in the meter price at the pump. California's excise tax on gasoline in mid-2011 was 35.7 cents per gallon for motor fuel plus 2.25% sales and usage tax, 13 cents per gallon for diesel plus 9.12% sales and usage tax.
Motor vehicle gasoline and jet fuel are subject to special taxation regime. In 2005, there were political disputes in the San Francisco Bay Area about whether revenues for jet fuel should be credited to San Mateo County (where San Francisco International Airport appears to be physically located), City and County San Francisco (where airports are legally located, as it belongs to City-County), or Alameda County, where Oakland International Airport is located. (The difference is most of the sales delivery points vs. the point of negotiation for sales.) This is controlled by Rule 1802, which has other terms about businesses that have multiple locations.
The Department of Taxes and Cost Administration of California provides an online list of sales taxes in the state local community.
Software shipped electronically to customers
According to Regulation 1502, the sale of non-custom software (cans) to customers downloading software from servers is generally not subject to sales tax. However, if the customer is provided with a copy of the software on physical storage media such as CD-ROM or DVD, all transactions are generally taxed. Thus, customers can generally avoid selling tax obligations by purchasing downloadable versions of software rather than physical versions.
Debate
Critics of California's current sales tax rules impose that governments provide incentives to promote commercial development (through zoning and other regulations - otherwise known as land use fiscalisation) during residential development, including the use of the leading domain condemnation process to transfer real estate to businesses generating sales tax higher. Some claim that low-income families pay almost eight times more of their income in sales tax than high-income families, making sales taxes as a regressive tax. Low income families pay relatively little income tax, so most of their income is available to spend so they are subject to sales tax. This is also because people who earn a higher income can save most of their income. However, the statistics do not assume that the money saved will eventually be taxed inheritance. Furthermore, since low-income families spend most of their income on groceries, countries such as California that exclude groceries from sales taxes are less regressive in the implementation of sales taxes.
See also
- California Proposition 218
- California Proposition 218 Local Initiative Power
- California Proposition 13
References
Source of the article : Wikipedia
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