The owner of the Rocket Fizz Soda Pop & Candy Shop in Camarillo only became aware this week that he needed to change his cash registers to drop the state sales tax by 1 percent on Friday.
Ryan Morgan said notices sent to him by the state usually say he owes money, not that he must start collecting less. But he was eager to look into the situation because he expects it will be good for business.
"By them lowering tax rates, it'll help increase sales, absolutely," he said.
Beginning Friday, the basic sales and use tax rate statewide drops to 7.25 percent from 8.25 percent as a temporary increase, passed in April 2009 as part of a state budget agreement, expires.
In addition, a new state law effective Friday requires large out-of-state retailers to collect sales taxes on online purchases made by California customers. If a retailer is not subject to the law, the purchaser still may owe use tax — a levy on the use, storage or consumption of personal property in the state, according to the Board of Equalization.
To notify retailers about the reduced sales tax, board spokeswoman Anita Gore said, a notice was posted on its website, the media was alerted, emails were sent to 680,000 retailers and letters went out to the top 1,000 taxpayers.
At the Bunnin Automotive Group in Oxnard, owner Leo Bunnin thinks the cut in sales tax will be a big win for auto dealers. A 1 percent reduction adds up on big-ticket items such as vehicles, he said.
"We are just figuring out now the best way to get the message out to the people," Bunnin said. "The government is so nice to reduce it by 1 percent that maybe we'll give an extra 1 percent to reduce it by 2 percent (on his auto sales). It's on the drawing board but highly likely."
With the change, buyers should check receipts carefully. Gore said it is the buyer's responsibility to bring up inaccurate taxation with retailers. Retailers who over-tax must either refund the money to the consumer or send it to the state.
"They cannot keep it," Gore said.
Be aware, however, that on top of the state's new 7.25 percent rate, some cities tack on their own voter-approved sales taxes.
In Ventura County, only the cities of Oxnard and Port Hueneme have local sales taxes, bringing the rate to 7.75 percent.
Gov. Jerry Brown tried but failed to convince legislators to maintain the higher 8.25 percent rate to help close a budget gap that stood at $26 billion early this year before severe cuts were made. The Board of Equalization estimated the 1 percent increase generated $11 billion for the state since April 2009.
George Runner, a member of the board, supports the drop. "This is great news for overtaxed California consumers and retailers who bear the sixth highest overall tax burden in the nation," he said.
Besides the sales tax, vehicle registration fees return Friday to 0.65 percent of a car's depreciated value, down from 1.15 percent — another temporary tax increase that was not extended.
The Department of Motor Vehicles has not sent out notices about the change, according to spokeswoman Jan Mendoza. Notices will be sent beginning Friday. People who have to register vehicles in July or August will get a 30-day grace period before facing late penalties.
Also, a 0.25 percent personal income tax surcharge in 2009 and 2010 expired Dec. 31.
Brown wanted to ask voters to extend the three temporary tax increases but could not get Republicans to agree to put them on the ballot.
For a listing of California sales and use tax rates by city and county, go to http://boe.ca.gov/cgi-bin/rates.cgi.