May 29, 2014

Sales Tax Burden Stays Flat for U.S. Consumers and Businesses in Q1 2014

Thomson Reuters Report Finds State Tax Levels Remained the Same, Miniscule Rises at City, County

NEW YORK - U.S. sales tax burden stayed flat, and indirect tax changes declined in the first quarter of 2014, according to the latest ONESOURCE Indirect Tax rate report from Thomson Reuters.

Thomson Reuters quarterly ONESOURCE Indirect Tax rate report summarizes changes in sales, use and value added taxes. In Q1 2014, state rates remained at an average 5.457 percent for the second straight quarter, while city and county rates experienced negligible rises, allowing the overall average burden to move slightly from 8.451 in Q4 2013 to 8.461 in Q1 2014. In addition, there were 211 U.S. tax code changes made, down from 231 changes in Q4 2013. This comes after back-to-back quarters of tax change spikes.

“Despite over 200 changes to the tax code for the second straight quarter, rates have seemingly stabilized,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “However, each of these additional changes represents an onus on businesses to be diligent to ensure they are compliant with the alterations.”

While no states changed their designated portion of the combined rates this quarter, the average city rate increased slightly from 1.751 percent to 1.756 percent, and the average county rate went from 1.243 percent to 1.248 percent. Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee once again remained for the highest state designated portion of the sales tax rate at 7.0 percent, while an Alaskan county (Wrangell) and city (Kodiak) topped their respective lists with a 7.0 percent designated portion of the rate as well.

Internationally, the start of the new calendar year brought many changes to countries around the globe. Serbia added a new 10 percent rate, and end-dated 8 percent rate and rule for computer products effective Jan. 1, 2014, while Croatia increased its reduced rate from 10 to 13 percent effective Jan. 1 2014. The Portuguese Autonomous Region of the Azores increased its VAT rates from 4 to 9 percent and 16 to 5 percent, 10 and 20 percent respectively, effective Jan. 1 2014.

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