Not So Temporary Sales Taxes
- Sales Tax Rate Changes
- Oct 1, 2015 | Gail Cole
A temporary sales tax in Brown County, Wisconsin was levied in January 2001 to fund the renovation of Lambeau Field (home to the Green Bay Packers). With renovations complete, the tax expires October 1, 2015.
Yet temporary sales taxes don’t always expire as planned. Many are extended, either to fund additional projects or to keep revenue rates steady. It turns out to be a challenge to make do with less when you’re used to having more.
According to an Urban Institute study from November 2014, among the 25 temporary tax increase measures enacted between 2008 and 2011, “about half were allowed to expire on schedule. The remaining measures were made permanent, modified and made permanent, or replaced with alternatives.” Nine of those were sales/excise taxes.
Expired as planned
- Arizona: The general sales tax was increased from 5.6% to 6.6% July 1, 2010 - May 31, 2013. The increase expired on schedule.
- District of Columbia: The general sales tax rate was increased from 5.75% to 6% on January 1, 2010. The increase expired on schedule September 30, 2013.
Expired but replaced
- California: The general sales tax rate increased from 6.25% to 7.25% April 1, 2009 - June 30, 2011, and then dropped back to 6.25% July 1, 2011 - December 31, 2012. Another temporary tax hike took effect January 1, 2013, raising the rate to 6.5%, where it is set to remain through December 31, 2016. There is talk of extending it.
- Kansas: The state sales tax rate was increased from 5.7% to 6.3% in 2010. On July 1, 2013, the state rate dropped to 6.15%. And then on July 1, 2015, the state rate was increased to 6.5%.
- North Carolina: The general rate of sales tax was increased from 4.5% to 5.5% effective September 1, 2009. On October 1, 2009, the rate was further increased to 5.75%. The rate dropped to 4.75% on July 1, 2011.
Extended or made permanent
- Colorado: Lawmakers agreed to include tobacco products, including cigarettes, in the sales tax base. The measure… was initially set to expire after two years. In 2011 lawmakers extended the tax increase for an additional two years, and in 2013, sales tax on tobacco products was made permanent.
- Hawaii: The lodging tax was temporarily increased by 1% on July 1, 2009 and again on July 1, 2010. Set to expire in 2015, it was instead made permanent.
- Nevada: The general sales tax rate was increased from 5.85% to 6.85% in 2009. That temporary rate was extended twice and was set to expire July 1, 2015. It did not.
- Oregon: A 50-cent surcharge on distilled liquor that took effect April 1, 2009 was initially set to expire June 30, 2009. It is now set to expire June 30, 2017.
The above are statewide changes. Throw local changes in the mix and rate extensions multiply. For example:
- Authorization to impose additional local sales and use taxes was extended in dozens of New York counties last August.
- San Mateo, California, is seeking to extend a temporary quarter-cent transaction and use tax for 30 years.
Whether they’re extended or expired, increased or reduced, tax rates change. Automated sales tax software as a service (SaaS) facilitates compliance in all states. Learn more.