As of Monday consumers purchasing taxable goods in Culver City will pay an additional one half percent in sales tax. Voters passed the increase in November by a wide margin to help close an increasing deficit at city hall.
The city expects to garner an additional $8 million for the city coffers.
Culver City wasn’t alone, sales taxes in more than 20 cities and counties across California increased on Monday.
Retailers are casting a wary eye at the increase because Los Angeles residents rejected a similar increase at the ballot box last month.
For example a $1,000 refrigerator purchased in Culver City will mean an extra $5 in sales taxes verses goods purchased down the block in Los Angeles. On a $25,000 vehicle, the increase would come to an additional $125 in sales tax. For car dealerships only Culver City residents will pay the increase. State law dictates that the sales tax rate is based on the address of the registered owner, not the location of the purchase.
Added to this is the Proposition 30 statewide sales tax that added a quarter-cent starting Jan. 1.
Tax watchdog groups aren't happy about the increases.
"We think it's bad news in that we already have a very slow economic turnaround," said David Kline, spokesman for the California Taxpayers Association. "The forecast is for very slow growth in California's economy. More sales taxes will certainly not help."
According to the watchdog agency California had the top sales tax rate even before Proposition 30 added 0.25 percent to the state rate, effective January 1.
The Tax Foundation’s rankings placed California first for highest state rate and ninth for highest combined state and local sales tax rate. California’s average local sales tax rate is 0.88 percent, which makes the state’s average combined rate 8.38 percent.
The Tax Foundation report does not include local transactions and use tax add-ons, which vary widely. In Pico Rivera, for example, the combined state and local rate is 10 percent.
Five states do not have a statewide sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. Of the states that do impose sales tax, the lowest state rate is in Colorado, at 2.9 percent.
The Tax Foundation noted that many studies have shown sales taxes can affect consumers’ behavior, influencing them to make major purchases in neighboring states or counties where the rates are lower.
Culver City residents can take comfort in one fact; the city of La Mirada increased the sales tax by a full percentage point and now stands at 10%, one of the highest in the state.
The increase is set to expire in 10 years.
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