California budget deal leads to lower sales taxes

CBS San Francisco
CBC San FranciscoJune 29, 2011

They state budget that lawmakers in Sacramento have been arguing over is all about cuts, but there is one item that budget doesn't include, extending sales taxes. Kiet Do reports.

On Friday the sales tax will drop one percent. What does that mean for smart shoppers?

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It seems everywhere you look there are signs the economy is improving. After years of closing car lots a  Kia dealership in West San Jose had a grand opening complete with a visit from Mayor Chuck Reed.

"Now is the time to buy a car," Reed announced to the crowd.

But not so fast, the state sales tax will drop one percent Friday which means on a $22,000 car you can save $220 just by waiting until the end of the week to buy.

One customer was crunching the numbers on a new $15,000  Kia when she learned the sales tax was going down. She says it makes a difference to her.

"I don't know if I'm going to just walk away or not," she says.

At Best Buy the same goes for other large ticket items like electronics. Mike Shields says he'll wait to get a new TV.

"I think everyone wants the sense that  they got the best bargain. It's a little irky to think you paid a few more dollars than you had to pay especially to the government," says Shields.

More on the state budget deal.

Leo Corpuz says he'll also wait to buy a new Mac and save $20.

"That works for me and extra $20 in my pocket. I'm happy about that."

It's unclear if a lower sales tax will translate into more sales.

"I think when it's going down it's going to have a positive impact," says Mayor Chuck Reed. "It will probably be short lived, but people who are waiting to buy a car might wait a few days to get a one percent decrease. That could be significant on a major purchase like that."

"Anytime taxes go down, I think consumers are happy" says Shaun Del Grande with the Del Grande Dealer group. "Anytime consumers are happy, I think businesses are happy."

So it seems like consumers will actually wait and save, but perhaps the bigger story is they are actually buying once again.

While a one percent drop may not be a whole lot in the grand scheme of things, economists say it has a positive psychological impact that will provide a slight bump to gross sales in California.