Tue 31 Mar 2009
Sales tax hike might spike big-ticket purchases
Posted by admin under County of LA , Tax Comments Off
Local businesses are hoping to capitalize on a rush of customers before a sales tax hike takes effect Wednesday that will thrust the rate in Los Angeles County to 9.75%. The county’s current sales tax rate is 8.25% and will jump by 1% statewide because of a measure included in California’s new budget act that is aimed at resolving a deficit of more than $42 billion reports the Glendale Press.
But rates in the county will grow by a half-cent more than other regions because of Measure R, a public transportation initiative that voters approved in November to fund a series of rail, bus and freeway developments.
That jump could end up hurting Glendale businesses over the next year, but it might be enough to motivate a surge in purchases today, particularly among “big-ticket” items like cars and large appliances, businesspeople said.
“No one wants to have this,” Judee Kendall, executive director of the Glendale Chamber of Commerce, said of the county’s soon-to-be high sales tax. “It’s added cost for everyone. But I think that there will be a bit of a rush on high-ticket items. If people are planning to buy anyway, they might do it before this kicks in.”
That sentiment has been enough to encourage more car buyers in at least one of the car dealerships in the area, which is home to a dealer from almost every major automaker, most of which are housed on Brand Boulevard.
“We’ve been awfully busy the last few days,” said Ron Smith, a sales representative at Bob Smith Toyota in La Crescenta. “People have been rushing in to make a deal before [the tax increase], but I don’t know what’s going to happen on Wednesday.”
That was the main concern for Mayor John Drayman, who expected the final day of the current sales tax rate to encourage some consumers to make major appliances before Wednesday, but was unsure what the future would bring for sellers of large items.
A 1.5% tax increase on a $30,000 car, for example, would result in a $450 jump above the $2,475 in taxes that would go along with a purchase at the current rate of 8.25%.
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