Broadening the sales tax to include admissions, amusements and personal rentals (like storage lockers and parking spaces) would bring in nearly $1 billion a year. The Legislature could, in fact, lower the tax rate and generate more revenue.
There's a tax exemption for food meant to exclude necessities of life, but it is too broad. The tax exemption applies to milk and vegetables -- but also to $20-a-pound artisanal cheese and imported bottled water.
The State Board of Equalization estimates that the annual revenue "loss" from the food exemption is $5 billion. Another $318 million could be gained just by taxing candy, snack foods and bottled water. But carving out segments of the grocery market is needlessly complex. A better option might be to tax all food and provide relief to low-income individuals through other means, such as a refundable income tax credit.
A broader base also would help local economies. Today, cities increase revenues by luring big-box retailers and auto malls, which generate huge amounts of sales tax. An expanded tax base could make digital businesses or personal service companies equally desirable.
These shifts in what we buy and how we buy it aren't going away -- and it is time for California to update its sales tax to reflect the 21st century economy. We can have a lower rate, stronger local economies, added revenue (if needed) and a more equitable tax system. So let's stop all talk about increasing the sales tax rate and instead work on the harder, but critically important, challenge of broadening the base.
