Sales Tax Goes Down, Sales Tax Goes Up?

San Francisco Mayor Ed LeeCalifornians across the state are going to notice a few extra dollars in their wallet when they go buy a new plasma TV, iPad 2 or DVD player.

That’s because, as of July 1, the state sales tax rate decreased by a full 1%. While this is great news for consumers – many of whom are still struggling to come out of the recession and the slow economic recovery – it’s not the best news for local cities dealing with massive budget cuts and deficits.

What the sales tax decrease means for San Francisco

San Francisco’s tax rate was 9.5% before July 1 and now sits at 8.5% – still higher than the statewide sales tax rate of 7.25%. San Francisco is already one of the most expensive cities to live and work in the country (hey, have you taken a cab lately?) so a few bucks off taxable items here and there would feel good in the short run.

But, the loss of that tax revenue also means even less money for our already cash-strapped city. As a result, Mayor Ed Lee is proposing to split the difference by instituting a half-percent sales tax increase that would raise the San Francisco tax rate to 9%.

This tax increase would go to the voters on November 8 and, if passed, would be instated on April 1. The half-percent increase would last for the next 10 years.

If Mayor Lee’s proposal goes through, it would generate some $60 million a year for San Francisco. Half of that money would go towards “police salaries, academy classes, firefighter salaries, etc.” and half would go towards “social services, including seniors, child care, health care,” according to the San Francisco Examiner.

What do you think about a sales tax hike following a sales tax decrease?

It might be hard for Mayor Lee to persuade San Franciscans to start paying more in sales tax so soon after they received a break – but few are likely to argue that police and fire are areas that should be subjected to greater cuts. The same could be said for services for children and seniors.

Take our poll and let us know how you feel about a half-percent

 

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Paid for by Phil Ting for Assembly 2012. FPPC ID# 1343137