States and localities continued to raise their sales tax rates last quarter in order to generate more revenue to close their budget deficits, according to a new report.

The Sabrix report, by the Tax & Accounting business of Thomson Reuters, found that state and local sales tax revenue increased in the third quarter by 5 percent, rising to $60.7 billion from $57.9 billion in 2009, indicating continued reliance on sales and use tax to address government deficits. The figures are based on U.S. Census Bureau data. There were a total of 194 changes in state and local sales and use taxes, with 94.8 percent of them being increases or new taxes.

“For the third quarter in a row, sales tax revenue has increased as the government continues to rely on taxes to address their budget shortfalls,” said Carla Yrjanson, vice president of tax research and content, in a statement. "With 194 changes in Q3 2010 alone, more stringent enforcement and increasing audits, the complexity and cost of compliance is expected to increase as businesses are obligated to implement those changes in a timely fashion.” 

Highlights of the Sabrix report include:

• 103 increases, 81 new taxes and 10 decreases.

• Three state changes, 31 county changes, 125 city changes and 35 transit changes.

• California continues to have the highest state rate at 7.25 percent, followed by Indiana, Mississippi, New Jersey, Rhode Island and Tennessee at 7 percent, compared to the average state sales tax rate of 5.55 percent in Q3 2010. Note that 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 to the average county sales tax rate of 1.15 percent in Q3 2010. Note that 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 Q3 2010. Note that this only represents the city-designated portion of the sales tax, not the total combined state, county and city rate.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access