Those tax hikes you voted for take effect now
Half-cent increase seems small, but it adds up at cash register, retailers say
Those who have been waiting to make a big-ticket purchase may want to do it soon: Appliances, clothes, bikes, cars and just about everything else is going to get more expensive in some areas of the Bay Area this week.
Sales tax increases will take effect in several cities and counties on Saturday, the result of voter-approved initiatives intended to raise money for infrastructure improvements and services.
Voters in San Jose, Pleasant
Hill, Martinez, Newark and East Palo Alto agreed to sales tax increases last year, which, along with countywide hikes in Santa Clara and Santa Cruz counties, will lift sales taxes higher, despite the expiration in January of the quarter-cent sales tax that was part of the statewide Proposition 30 approved by voters in 2012.
A half-cent increase may seem small on the ballot, but it adds up at the cash register, said Randy Nelson, who has owned De La Cruz Deli chain in the South Bay for more than 40 years. “A halfcent (increase) will make a difference (to consumers),” he said.
In San Jose, where Nelson’s last remaining deli is located, the tax rate will jump from 8.75 percent to 9.25 percent Saturday, when Santa Clara County shoppers will start paying an extra half-cent sales tax under Measure B, which voters approved in November.
The tax boost comes on top of San Jose’s own citywide Measure B, a quartercent, voter-approved increase that went into effect Oct. 1.
Larger impact
Items with bigger price tags than a sandwich will see a larger impact from the sales tax. A $25,000 car, for example, will have a sales tax of $2,437.50 — 9.75 percent — for residents in Newark, where the city’s Measure GG will hike the sales tax half a cent. For the $25,000, that’s a difference of $125 compared with the city’s current sales tax of 9.25 percent.
Dave Bzdula, owner of Big Dave’s Bikes in Pleasant Hill, said the upcoming tax hike of half a cent, thanks to the city’s Measure K, could have more of an impact than previous ones that were smaller.
“(The impact) is to be seen, of course, because it’s a big one,” Bzdula said.
Like furniture, appliances and other high-priced items, sales tax on bicycles can add a chunk of money to the overall cost. A $400 bicycle, for example, would have $35 in sales tax in Pleasant Hill, where the rate will jump from 8.25 percent to 8.75 percent.
Bzdula said he does not usually see much of an impact from sales tax when it comes to shoppers’ willingness to buy bikes, partly because Pleasant Hill’s rate has been comparable or lower than neighboring cities. Still, he stays sensitive to price tags in an era where online retailers like Amazon pose stiff competition.
“(Competition from online retail) weighs on me more than sales tax,” he said.
The sales tax measures in the region received ample support from city leaders and even business groups during the Novem- ber election, with many citing needed infrastructure improvements and city services. As cities and counties have struggled to fund these services in recent years, they have increasingly turned to voters for help.
The passage of a 2003 law increased limits on local sales taxes California cities and counties could impose, as long as voters approved. Since then, the transaction and use tax (as the sales tax is called) has become “a popular and successful revenue-raising tool for cities,” Michael Coleman, the principal fiscal adviser to the League of California Cities, explained in a July 2016 analysis.
Santa Clara County’s half-cent increase is expected to generate between $6 billion and $6.5 billion for BART expansion, Caltrain enhancements and improvements to roads, highways and bike lanes over the next 30 years, according to the Santa Clara Valley Transportation Authority. East Palo Alto residents approved a halfcent tax to invest in police, parks and infrastructure, bringing the net sales tax to 9.25 percent. The city can end the tax only with a public vote.
Santa Cruz County’s half-cent increase is slated to generate $17 million a year for 30 years for transportation improvements. In the East Bay, Martinez shoppers will pay 8.75 percent in sales tax after its half-cent tax increase kicks in to fund roadway projects for 15 years.
Some residents and business owners have expressed concern over how the money generated from sales tax is used. Nelson, of the De La Cruz Deli, said that as a business owner and resident, he does not mind paying taxes, but he wants to make sure the money goes toward good purposes, like fixing roads. He takes issue when some increases are not legally earmarked for specific purposes and instead go to a city’s general fund.
New library
Pleasant Hill Citizens for Responsible Growth advocated against Pleasant Hill’s sales tax increase last year over worries about the city using the funds for employee salaries and benefits instead of what it has promised: to build a new library, resurface streets and pay for other capital improvements.
Others believe a higher sales tax is worth the promise of infrastructure improvements.
“Transportation has remained a thorn in the side of many Bay Area residents as the average commuter to San Jose spends 30 minutes in traffic one way, and it is only getting worse,” the Silicon Valley Organization (formerly the Silicon Valley San Jose Chamber of Commerce) wrote in a blog post in November. “Initiatives like Measure B, which requires a half percent sales tax over a 30-year period, could improve an increasingly dire situation.”