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SCV braces for tax hike

Los Angeles County sales tax increases to 9.25 percent until at least 2011 to address budget crisis

Posted: April 1, 2009 1:15 a.m.
Updated: April 1, 2009 4:59 a.m.
 
That's not a misprint on your receipt and it's not an April Fools' joke, either. Sales tax in Los Angeles County went up to 9.25 percent today, part of a move to drum up more dollars for the state.

The temporary increase is projected to bring in $5.8 billion over the next 15 months. It is set to expire July 1, 2011.

However, if voters statewide approve Proposition 1A this May, the extended increase will remain in place until July 2012.

In the meantime, the tax goes up again July 1, this time to 9.75 percent, as a consequence of Measure R, approved by county voters last November to raise money for public works projects. Because of this tax add-on, the rate eventually will fall back to 8.75 percent in either 2011 or, if Proposition 1A is approved, in 2012.

"This is supposedly supposed to help us balance the budget, but it puts more pressure on the consumer," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

The heavier levy was preceded by widespread deals from retailers of big-ticket items like automobiles, furniture and appliances.

However, Kyser said those deals may prove to be a form of borrowing from future sales.

Consumers will likely be more careful when it comes to higher-cost items rather than normal purchases, he said.

"For most people, their shopping won't (change) much," he said. "Most people will roll with the punches."

The bump in sales tax doesn't mean more dollars for the city of Santa Clarita, but it does have officials wary of the effects, city spokeswoman Gail Ortiz said Tuesday.

"This is a big wait-and-see," she said. "We're very concerned."

Today's increase comes on the heels of the results of the city's sales tax revenue totals for the fourth quarter of 2008 - a staggering 15-percent drop from the same period in 2007.

Ortiz said there has been an uptick in sales of big-ticket items over the last month, but what will happen in the coming months remains to be seen.

Sales-tax revenue - 1 cent for every dollar spent in the city - is the largest contributor to Santa Clarita's general fund.
On Tuesday afternoon, shoppers shuffled in and out of the Pavilions grocery story in Valencia, most of them aware of the tax increase.

"I feel like it's part of something that has to be done," said Norman Williams, 76, of Valencia.

Williams blamed the bailout, the economy and President George W. Bush for the budget shortfalls that are prompting tax increases.

"Mr. Bush left us in a hell of a situation," he said.

Moody Eljabry, 48, of Saugus, opposes the sales-tax increases.

"It's not fair," he said. "Because of the recession, no one has money."

Eljabry owns Safeway Locksmith in The Promenade shopping center. If left up to him, he would lower sales taxes to help balance local budgets. "Instead of raising taxes," he said, "give people tax breaks and people will spend more money and (the government) will raise more taxes."

Signal Staff Writer Brian Charles contributed to this report.


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