(RIVERWOODS, ILL., December 14, 2009) – Businesses should expect state governments to be looking for ways to increase their sales and use tax revenue to ease financial shortfalls, according to the white paper The Impact of the Loss of State Sales and Use Tax Revenue on Business and Consumers from CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com). To access the white paper, click here.
In the white paper, CCH CorpSystem® Product Manager, Sales and Use Tax, Phil Schlesinger notes a number of states are facing more than a hiccup in revenues.
“For many states, the picture is very grim and could take years to rebound from the current economic downturn. Whether popular or not, states will have cut costs and generate additional revenue,” Schlesinger says.
Schlesinger examines nine steps that states could take to increase sales tax revenues. The three “obvious choices” are to raise rates, expand the taxable base – by taxing services, for example – and increase collections.
“Of these three likely candidates, increasing audit and tax collection efforts, or in other words, enforcing existing laws, would be the only one that wouldn’t carry any potential negative risk,” Schlesinger notes.
Schlesinger identifies eight states that have already increased their sales tax rates or are likely to do so this year, and localities in 15 states that have followed suit or are likely to this coming year; five states that will have expanded their tax base by early next year; 10 states that have introduced or are seriously considering measures to expand nexus; five states that are taking a serious look at joining the Streamlined Sales Tax.