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UPDATE: Oh no! 9.25% sales tax on some service businesses
November 6th, 2008, 1:13 pm · 19 Comments · posted by Jan Norman, small-business columnist
Dr. Gayle Roberts at the Northwood Animal Hospital in Irvine said she might have to close her doors if Gov. Arnold Schwarzenegger persuades the Legislature to require veterinarians to charge sales tax.
Click here to read the Register’s main story on the proposal. Click here for the summary of proposed spending cuts and tax increases.
Basically, businesses that already charge sales tax — 7.75% here in Orange County — will have to charge 9.25%. But the governor is proposing to have some services charge sales tax for the first time. Effective Feb 1, 2009:
- appliance and furniture repair
- vehicle repair
- golf
- veterinarian services
Most of those businesses are small.
And starting March 1, 2009:
- amusement parks
- sporting events
“It would be devastating,” Roberts said. “We’re already off 10% - 20%. People are putting off vaccines and preventative care. I might as well close my doors.”
She has been a veterinarian for 28 years and bought the Irvine practice 22 years ago.
Another veterinarian, Thomas Irwin at Newport Mesa Animal Hospital, added, “Any increase on taxes on services is insanity. People will have to make a choice of treating or not treating their pet because of a tax they are not willing or able to pay.”
“That’s bizarre. That’s crazy,” said Steve Overman, service manager at Buddy’s Auto Repair in Garden Grove. “That will shut the shops down.”
Owner Buddy Hamblin said, “In 1992, I was all for an increase in taxes because the economy was really bad. I have not voted for a tax increase since that time. I don’t think we should be raising taxes and punishing people for mistakes in government.”
He favors instead tax increases on oil companies.
Auto repair shops already pay sales tax on parts. This proposal would require sales tax on labor, too.
Fountain Valley tax expert Judee Slack of SlackTax Inc. objected to Schwarzenegger’s selective approach. “This is a crazy idea. California’s sale tax is so convoluted. I have a real problem with putting sales tax for services on specific industries.
“This is absolutely the worst possible time for our state leaders to heap new, burdensome costs upon those who are working hard to create jobs that stimulate the economy,” said John Kabateck, California executive director of the National Federation of Independent Business. “The budget crisis must be dealt with by cutting more government waste and spending our precious tax dollars more prudently, much like any business does during difficult times.
“Increasing taxes on California small businesses will force them to continue shedding jobs, deepening the problems facing our families and the state budget. As the adage goes, ‘the first rule to getting out of a hole is to stop digging.’”
Stay tuned from more feedback from affected small-business owners. Or put your comments below.
More on small business taxes…
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19 Comments
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This is nuts. Yeah right, they’ll revoke the tax in 3 years. That has never happened. I thought that tax on tax was unconstitutional. Cut the benefits to illegal immigrants and non-American Citizens before you start doing this. This will destroy any semblance of an economy that we have left. I feel the word “R E C A L L” coming on. Someone get the petitions going.
I know it will not happen, Govt should cut more of their services and programs.
RECALL, Mark92677?? If you do your homework, you will see that the governator tried to do exactly what you described, but got shot down by our dysfunctional leadership in Sacramento. He didn’t want to implement a sales tax rate, but the legislature got upset. Don’t blame the governor, blame our useless legislators in Sacramento.
We all know the state has money problems, but, seems to me there are too many entrenched people working for the state that don’t want to be part of the “unemployed”. That is understandable as well, everyone wants and needs a job. But, this money is suppose to be going for schools, that’s okay too, the teachers deserve it! The bigger problem with the schools are the amount of “administraters” who make well over 6-figures a year, isn’t that an area that could be consolidated? Doesn’t seem as though the governor and other “public servants” are willing to do what they demand the citizens must!
I wonder how many of the business owners complaining about the new sales taxes voted for Obama?
Get rid of all the illegal immigrants or its over. THEY ARE CRUSHING OUR SCHOOLS, HOSPITALS AND ALL STATE SERVICES> WAKE UP!!!
How can they cut anything? Every 2 years the retards that live here pass billions of dollars in new bond initiatives with emotional titles like “bond measure for sick furry puppies.” We have a $10 billion deficit and we just ran out and bought bullet train. It’s the people that need to start pointing that finger at themselves before we bankrupt ourselves.
Is the above list the complete list of services that would be taxed?
I’m having a hard time finding a link to the list of all specific services that would be taxed. Please post a link if you find one. Thanks.
Hi Phil G.
Here’s the link to the gov’s summary of spending cuts and tax increases:
http://gov.ca.gov/fact-sheet/10965/
The relevant part (way down the list) says:
Broadening the Sales and Use Tax to Include Certain Services: Effective February 1, 2009, the sales and use tax rate will be applied to appliance and furniture repair, vehicle repair, golf, and veterinarian services. Effective March 1, 2009, the sales and use tax rate will be applied to amusement parks and sporting events. This is expected to generate additional General Fund sales tax revenue of $357 million in 2008-09.
Hope that helps,
Jan Norman
I moderate this blog
that’s a horrible idea, taxing veternary services. Owning a pet is already very expensive, and this might force some people to give up their pet, thus the shelter population will only increase
Crazy…forget this nonsense. This state is the Titanic with the iceburg in sight. I am moving to Arizona.
Bad idea, bad timing. Nothing will shut the economy down faster then increasing sales tax. It sends a clear message - “Don’t spend your money!”
I agree with Jonnymax - The citizens of CA need to wake up and understand that Bond Measures - no matter how good they sound - are spending money we don’t have. Our governor (who I voted for) has failed miserably in controlling congress… Congress has failed us miserably by continuing to bicker and pass legislature that increases our deficit. Come on government - make the tough decisions! Increasing sales tax is not the tough decision I’m talking about. Bad idea. BTW - did that 1/4% increase to help SF earthquake ever go away?
How many of you voted for that idiotic $3billion ($6 billion when paid back) bond to fund embryonic stem cell research?
Funny, I still see people using wheelchairs.
Tax increases are inevitable when the people of California vote for such boondoggles.
Look . . . the state is a bloated disaster from the Pat Brown days. Arnold is trying his hardest not to raise income taxes and still keep the state solvent. The Republicans want no more taxes and the Democrats want to continue to bleed this state dry. Why is Gray Davis gone, because Democrats cannot be trusted with the purse strings. You’re all telling me that the only voice of reason in Sacramento is now the bad guy. I took my dog to the vet and the bill was $80. I suppose I can live with it being $87 next time to bail the greatest state in the country out of the debt the liberals spent us into under years of failed leadership under Gray Davis. Seems very, very simple to me.
[...] of those businesses are small. Click here to read [...]
liberals hurt the country with bad taxes and poor morals
This state is the Titanic with the iceburg in sight. I am moving to Arizona.
Sorry to say Mike I going there too–loved this state. loved HB BYE BYE!!!
[...] Oh no! 9.25% sales tax on some service businesses OCRegister ,November 07, 2008 That’s crazy,” said Steve Overman, service manager at Buddy’s Auto Repair in Garden Grove. “That will shut the shops down.” Auto repair shops already pay … [...]
Lets stop paying for service for illegal aliens. Why do I have to pay to send thier kids to school. They come here and learn how to work the system and all the hardworking legal citizens have to pay for the bills.
Have you been to a emergency room and seen nothing but illegals getting free care while you have to wait hours for care or you die in the waiting room.