User:Mike Dillon/Sales and use taxes in California

In the state of California, sales and use taxes are collected by the State Board of Equalization (BOE). The statewide sales tax rate in California is 7.25%, although the rate in many cities is higher because of supplementary "district taxes". As of April 2006, the highest rate is 8.75% in Alameda County and the cities of Avalon (Los Angeles County) and Richmond (Contra Costa County). The most recent changes to the local tax rates were published on April 18, 2006. Official updates are published in BOE Publication 71.

Application
The statewide 7.25% is allocated as:


 * 6.25% - State
 * 5.00% - State - General Fund
 * 0.25% - State - Fiscal Recovery Fund
 * 0.50% - State - Local Revenue Fund
 * 0.50% - State - Local Public Safety Fund
 * 1.00% - Uniform Local Tax
 * 0.25% - Local County - Transportation funds
 * 0.75% - Local City/County - Operational funds

District taxes
Supplementary sales tax may be added (with voter approval) in increments of 0.125% by cities, counties, service authorities, and various special districts (such as the Bay Area Rapid Transit district). The effect is that sales tax rates vary from 7.25% (in areas where no additional taxes are charged) to 8.75% (in some urban areas).

Exemptions and exclusions
Vehicle purchases are taxed based on the city and county in which the purchaser registers the vehicle, and not on the county in which the vehicle is purchased. This negates the (perceived) advantage of purchasing a car in a "cheaper" county in order to save on sales tax (a 1% difference in sales tax rates on a $30,000 car would otherwise result in a $300 savings)

Excluded are food (except where sold hot or consumed on the premises), animals, plants, fertilizer, drugs, certain medical supplies, utilities, certain alternative energy devices and supplies, art for display by public agencies, and veterans pins. There are many specific exemptions for various veterans, non-profit, educational, religious, and youth organizations. Sale of items to certain out-of-state or national entities (mostly transportation companies) is exempt, as are some good sold while in transit through California to a foreign destination.

There are also exemptions for a large number of specific products, from telephone lines and poles, to liquid petroleum gas for farm machinery, to coins, to public transit vehicles. There are partial exemptions for such varied items as racehorse breeding stock, teleproduction service equipment, and timber harvesting equipment. For an organized list of exemptions, with estimates for how much revenue the state loses for each, see Publication 61 of the Board of Equalization.

Place of sale or use
Motor vehicle gasoline and jet fuel are subject to special taxation regimes. In 2005, there was a political dispute in the San Francisco Bay Area about whether revenues for jet fuel should be credited to San Mateo County (where San Francisco International Airport is physically located), the City and County of San Francisco, which owns the airport, or Alameda County, where Oakland International Airport is located. (The distinction is largely point of delivery vs. point of negotiation for the sale.) This is controlled by Regulation 1802, which has other provisions about businesses which have multiple locations.

Criticism
Critics of the current sales tax regime charge that it gives local governments an incentive to promote commercial development (through zoning and other regulations) over residential development.