Most Tax Changes Last Quarter Were Increases

Of the 131 changes in state and local taxes last quarter, 91.6 percent were either tax increases or new taxes, according to a new report.

The quarterly Sabrix report from the Tax & Accounting business of Thomson Reuters found that there were 80 tax increases, 40 new taxes and 11 tax decreases last quarter at the state and local level. State sales tax revenue increased for the first time in six quarters, growing by 0.3 percent. The report identified two tax changes at the state level, 19 at the county level, 83 at the city level and 27 for transit.

The highest combined sales tax rate (state, county and city) of 11 percent was found in Arab, Ala., and Bellwood, Ill., followed by St. Louis, Mo. at 10.491 percent. The average combined rate was 8.3 percent in Q2 2010.

California had the highest state rate at 7.25 percent, followed by Indiana, Mississippi, New Jersey, Rhode Island, Tennessee and South Carolina at 7 percent, compared to the average state sales tax rate of 5.49 percent in Q2 2010. However, this only represents the state-designated portion of the sales tax, not the total combined state, county and city rate.

Sitka, Alaska, had the highest borough/county rate at 6 percent, followed by Hinsdale, Colo.; Juneau, Alaska; Chambers, Ala.; Tuscaloosa, Ala.; Iberville Parish, La.; Orleans Parish, La.; St. Bernard Parish, La.; and St Charles, La., at 5 percent, compared with the average county sales tax rate of 1.15 percent in Q2 2010. However, this only represents the borough/county designated portion of the sales tax, not the total combined state, county and city rate.

Alaska is home to the top 10 highest city rates with Wrangell at 7 percent, followed by Bethel, Buckland, Cordova, Dillingham, Hoonah, Kodiak, Kotzebue, Petersburg, and Thorne Bay at 6 percent, compared to the average city sales tax of 1.66 percent in Q2 2010. This only represents the city designated portion of the sales tax, not the total combined state, county and city rate.

“Regardless of whether there is a tax increase, decrease or a new tax all together, each change represents a significant operational outlay for businesses that are burdened with implementing those changes in a timely fashion,” said Carla Yrjanson, vice president of Sabrix Tax Services, part of the Tax & Accounting business of Thomson Reuters. “As government continues to rely on sales and use tax to address their budget shortfalls, the cost of compliance will keep rising, particularly for businesses that manage the process in-house.”