Expect to shell out more cash for cars, homes, and just about everything else in the coming year. State sales tax will go up a quarter of a percent on January first as a result of Proposition 30. It might not sound like a lot, but just wait until you make a big purchase.
But it’s not just sales tax, there is also a new lumber tax that passed in September.
Be prepared to spend an extra cent for every four dollars you spend in 2013, or an extra nickel for every 20 bucks, if you prefer. It does not seem like a lot, but it can add up.
“If you are buying a 25-thousand dollar car, you are going to be paying about 65 dollars more for that car,” said Senator George Runner of the California Board of Equalization.
Still not a dramatic price increase, but managers at Lithia Toyota of Redding said Thursday, a client who was buying five cars for their company, purchased early, specifically to avoid next year’s tax hike.
“I know California is going through its financial challenges, but that fact is, I don’t think we are going to get through it successfully by passing it on to already struggling Californians,” said Runner.
But that's not the only tax increase that Californians will face next year, there is also a brand new one percent tax on wood products.
“It’s going to affect everyone that is in the construction industry, because ultimately, you can’t keep raising costs and expect to keep creating jobs, so again, it is just a trend that is going in the wrong direction,” said Don Ajamian of the Shasta Builders Exchange, adding that the tax will have the biggest effect on framers.
“Their typical contract is 50% lumber and lumber products, so to have a 1 percent increase on half of every contract they are doing will have a huge impact on them,” said Ajamian.
Combine the two taxes on a brand new $500,000 house and you'll pay about two grand more in 2013 than in 2012.
The one percent lumber tax subsidizes the cost of timber harvest plans. The rise in sales tax, coupled with an increase in income tax for high earners will bring in an extra 6 billion dollars for schools and public safety.
