August 4, 2015

Sales Tax Increases Marginally for U.S. Consumers and Businesses in Q2 2015

Thomson Reuters Report Show Fewer Local Tax Code Amendments for Second Straight Quarter

NEW YORK – The U.S. average combined sales tax rate shrunk marginally in the second quarter despite a 30 percent increase in new local indirect taxes, according to the latest ONESOURCE Indirect Tax report from Thomson Reuters.  

The report, which summarizes quarterly changes in sales, use and value-added tax, showed that state-imposed retail sales tax remained unchanged at 5.457 percent across the nation, for the third quarter running.  It also showed that around 84 new local taxes were introduced in Q2, compared to 65 in Q1; however the nationwide average indirect tax rate for both cities and counties dropped slightly, and fewer of these jurisdictions amended their existing sales tax rates.

“There is a lot of activity around the non-standard rates or special taxes of which tax professionals should take notice,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “Equally more local jurisdictions are introducing new taxes with new tax filing requirements which calls for more vigilance for CPAs if they have to meet compliance standards.”

Once again, Indiana, Mississippi, New Jersey, Rhode Island and Tennessee tied for the highest state sales tax rate at 7 percent, followed by Minnesota at 6.875 and Nevada at 6.85 percent.

Jurisdictions with the highest combined sales tax rates were Tuba City, AZ, (12.9%), Arab, AL, (12.5%), Piedmont, AL, (12.5%), Coconino County, AZ, (11.9%), McKinley County, NM, (11.75%), Pinal County, AZ, (11.7%), Mansfield, AR, (11.625%),Cibola County, NM,(11.5626%), San Juan County, NM, (11.5626%), Collinsville, AL, (11.5%), Dermott, AR, (11.5%), Eudora, AR, (11.5%), Lake Village, AR, (11.5%), Menifee, AR, (11.25), and Sunset, AR, (11.25%).

Despite a national average city sales tax rate of 1.759 percent, 12 Alaskan cities peaked with rates between 6 and 7 percent.   Kodiak City, AK, was the highest taxing city nationwide at 7 percent while 11 other cities within the state ranged from 6 to 6.5 percent. 

Wrangle, Petersburg and Sitka counties in Alaska were the highest taxing counties in the country with rates between 6.5 and 7 percent, while three other counties followed with the next highest rates at 5 percent.  In addition, counties in Alabama, Colorado, and Louisiana also imposed a 5 percent rate. The average nationwide county tax rate was 1.238 percent.

Internationally, Brazil introduced new rates designated towards COFINS, a federal retirement and health care contribution.  Corporate entities collecting VAT in the country are now mandated to pay rates of 8.54 and 10.68 percent towards the contribution beginning May, 2015.  India implemented reduced VAT rates in two States, while Pakistan made multiple country-level VAT changes regarding various types of liquid fuel beginning June 1, 2015.  

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