California Sales Tax Drops 1 Percent

Tax increases passed in 2009 have expired.

Written by YINTING HUANG / Published July 15, 2011 

On July 1, the statewide tax rate in California dropped 1 percent due to expiring tax increases. In addition to saving a penny for every dollar spent, consumers now save a staggering 43 percent on annual vehicle registration fees.

A temporary 1 percent tax rate increase was implemented on April 1, 2009, a year in which 23 other states experienced similar tax hikes. The statewide tax rate rose to 8.25 percent, although additional local district taxes still apply. It was decided in May 2009 that the tax increase would last only until July 1, 2011.

Now, as the state sales tax returns from 8.25 percent to 7.25 percent, Temple City’s tax rate drops to 8.75 percent in response. The sales tax in Los Angeles County is also 8.75 percent.

The change instilled a sense of optimism in the hearts of many.

“Of course it’ll encourage people to buy more,” said Linda Payne, president and CEO of the Temple City Chamber of Commerce. “And it will help out businesses.”

Some Temple City residents, however, do not believe that a tax rate drop would benefit California’s economy.

“It doesn’t amount to anything,” said education worker Joe Ringo. “If it’ll solve the state’s problems, I’d rather pay more.”

While it is estimated that the lower tax rate will save Californians $5.87 billion a year, the state is expected to lose $4.5 billion from the decrease.

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