Novato’s sales tax increase plans lack creativity and foresight – Marin Independent Journal

This November, Marin County voters will face at least a dozen different local measures, all aimed at raising revenue at the local level either through bonds or by increasing the sales tax.

In Novato, voters will likely be asked to weigh in on Measure C, a proposed sales tax increase that, if passed, will likely affect most shoppers in Marin County. Only voters in Novato will have the opportunity to vote on Measure C. However, Measure C will likely affect almost everyone in Marin County, since in my experience, almost everyone in Marin County shops at Vintage Oaks Shopping Center in Novato.

On the surface, raising the sales tax seems like an easy way to raise revenue. Even if voters don’t like paying more, raising the sales tax by a fraction of a cent doesn’t seem like a lot of money. And many voters actually find the idea of ​​voting to tax other people — non-Novato residents who shop at Vintage Oaks, for example — appealing.

However, sales tax increases can have complex effects on an entire region, not just on a single municipality.

The actual evidence on consumer response to particular sales tax environments is complex. Anyone who has ever been to the East Coast, where states are smaller in area and shopping across state lines is common, knows that areas with low or no sales tax become shopping havens.

New Jersey, for example, does not impose sales tax on most clothing items. As a result, New Jersey’s long list of sales tax-free consumer goods has made Paramus County malls a multigenerational destination for families from New York, Connecticut and Pennsylvania. Many typically travel to New Jersey once or twice a year to buy new coats and shoes for the winter.

From a business perspective, one could argue that while New Jersey is foregoing revenue maximization by not taxing items that are taxed in other neighboring states, the state as a whole is actually making a smart financial decision by attracting more businesses and thus increasing its revenue.

If the sales tax goes up in Novato, no one in Marin will leave the state to buy shoes. But wandering purchases can affect entire regions. Anyone who has ever worked in retail knows that consumers are incredibly reactive and the retail world is constantly evolving.

Proponents of sales tax increases tend to view shoppers – taxpayers, residents and visitors – as a sure-fire source of revenue. However, raising sales tax may not be a smart, practical or easy way for one municipality to raise revenue if neighboring municipalities (or even neighboring counties) choose a more creative approach to revenue generation.

From my perspective, the most interesting thing about the discussion of Measure C at the Novato City Council meeting in mid-May was its lack of philosophical creativity in simply raising the sales tax to raise revenue. City officials have been raising or attempting to raise the sales tax since 2010. It’s worth noting that while the city has successfully raised the sales tax, the increased revenue has had little impact on Novato’s chronic financial problems.