Sunday, December 30, 2012

California sales tax on its way up

California's sales tax is set to increase one-fourth of a percent on January 1. That means your purchases in most of Orange County will be taxed at 8 percent, up from the current rate of 7.75 percent.

In short, you'll pay an extra quarter for every $100 you spend in 2013.

Shoppers at Toyota of Tustin examine vehicles Monday and consider deals in advance of January's sales tax increase.

JOSHUA SUDOCK, ORANGE COUNTY REGISTER

ADVERTISEMENT

Sales tax savings

Here is how much you can save by purchasing certain items before the new sales tax rate goes into effect.

Cup of coffee: 1 cent

Olloclip lens for iPhone: 17 cents

Nice dinner for two: 35 cents

Western Digital hard drive: 85 cents

Oakley Airwave goggles: $1.50

Vizio 60" big-screen TV: $2.50

Kia Rio: $34.00

State voters approved the quarter-cent tax hike on the November ballot as part of Proposition 30, although the measure received a 59 percent "no" vote in Orange County. Funds raised by the increase will go to K-12 schools and community colleges.

Consumers can save money by making any major purchases before Tuesday.

"It won't matter unless you're buying a big ticket item like a car," said Dennis Malloy, a salesperson at Easylife Furniture in Costa Mesa.

Malloy said none of his customers have mentioned the tax hike, which won't make much of a difference when purchasing couches and beds that sell for hundreds of dollars. "But if you're getting a car, you better buy now."

Tustin Toyota is using its web site, email blasts and radio spots to urge people to make purchases now and "beat the burden of the tax increase." The year-end marketing blitz has been successful. December sales are up 50 percent compared to the same time last year, said new car director Greg Vernon, speculating that a key reason for that bump is that people want to pay less on taxes.

"Quite a few customers have mentioned the tax hike," Vernon said. The big seller this month has been the Sienna XLE minivan, with a retail price of $33,360. "Even if it's just two or three hundred dollars, that's a substantial savings," he said.

But not everyone is talking up the tax hike to hike up business. Americans face a far bigger financial uncertainty as the "fiscal cliff" negotiations over federal tax increase and spending cuts remain unresolved.

Sean Taylor, member services manager for the Orange County Automobile Dealers Association, said he hasn't heard of other car dealers incorporating the impending tax increase into marketing campaigns.

Even people who would save the most by making an early purchase are seemingly unfazed about paying more sales tax next year. Acquiring a 2013 Lamborghini Aventador for $397,500 before 2013 would yield almost $1,000 in sales tax savings. "But that only works if you're buying the car in cash," said Pietro Frigerio, general manager of Lamborghini Newport Beach in Costa Mesa. None of his customers have mentioned the tax hike. Most of his clients lease, so Frigerio said they would only save a couple of dollars per month.

In La Habra, where voters approved a 20-year half-cent hike four years ago, sales tax will increase to 8.5 percent. That is still lower than the Los Angeles County, where consumers will pay 9 to 10 percent for retail purchases next year. Los Angeles city voters will vote in March on another half-cent hike.

On Twitter, the social network where consumers often air complaints about companies and government, much of the recent Orange County chatter about tax hikes has centered around the "fiscal cliff" stalemate and national policy, with very little mention of California's tax increases.

Although the statewide tax hike is just one-fourth of a percent, the tax increase still could have a marginal effect on consumer spending, said Scott W. Drenkard, economist with the Tax Foundation think tank in Washington, D.C. "When prices go up, demand goes down. It's just the law of supply and demand."

"I'm more concerned about the income tax hike that was already retroactively imposed," Drenkard said. That increase, also a part of Prop. 30, will affect households that earn more than $250,000 a year, and will apply to income earned during 2012.

Contact the writer: 714-796-3589 or ksablan@ocregister.com


Source: http://www.ocregister.com/articles/tax-382037-hike-increase.html

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