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A few shoppers splurge before sales tax goes up

March 30, 2010

California’s budget crunch

March 31, 2009|By Victoria Colliver, Chronicle Staff Writer
Better move fast if you want to beat Wednesday’s state sales tax increase.

Eric Edenfield of San Francisco did just that when he purchased a water heater last weekend for the duplex he rents out in Guerneville. The new water-saving “on demand” heater might be good for the environment, but at $3,000, it’s tough on the wallet.

“I bit the bullet and I ordered it,” said Edenfield, 45, who was considering buying a second water heater for his other unit before Wednesday. “I didn’t need it until the end of the year, but I thought, why not save (some money) now?”

A temporary, statewide, 1 percent sales tax increase goes into effect on Wednesday. It is designed to add revenue to California’s coffers, but could worsen what is already a tough time for consumers and retailers in a recessionary economy.

The new sales tax is set to expire July 1, 2011, or July 1, 2012, depending on whether voters approve a constitutional amendment, Proposition 1A or the Budget Stabilization Act, in a statewide election to be held May 19.

The increase means that the sales tax in California will range from 8.25 percent in some areas – among them Humboldt, Monterey and Shasta counties – to as high as 10.25 percent in Pico Rivera and South Gate, both in Los Angeles County. That’s because voters in some cities and counties approved local sales tax increases that also go into effect Wednesday.

In the Bay Area, voters in Sonoma and Marin counties approved an increased tax to fund rail transit, bumping the rate to 9 percent there. In Santa Rosa – where Edenfield bought his water heater – the rate will be 9.25 percent due to the city’s current district tax.

Effective Wednesday, the sales tax in San Francisco will be 9.5 percent. The tax will be 9.75 percent in Alameda County, 9.25 percent in San Mateo County and 9.25 percent in Contra Costa County, with the exception of Richmond, Pinole and El Cerrito, where it will be 9.75 percent.

Some consumers said they increasingly are turning to the Internet, where often they can skirt state taxes if retailers fail to add those charges to the total sales costs.

Byron Gordon of San Francisco said he’s cutting back on nonessential purchases and buying online when he calculates that shipping costs are lower than taxes.

“In principle, the sales tax is a great thing because it pays for health care, education and all those services we need, but people are finding ways to cut back on spending,” said Gordon, 41, an account executive with an Internet public relations firm. “If they can find a way to not pay, they will.”

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