Sale Taxes and Leakage

Russ Steele

The other day I saw a Measure L sign and did not know what it was about. On investigation is it for a sales tax increase in Nevada City that gets dumped into the general fund. I knew that Grass Valley was having a measure N to increase sales tax in the city to produce more general fund revenue.  There was a brief mention of sales taxes by the Board members representing the cities at the last ERC Board meeting, but no discussion of the economic impact and the potential leakage of sales to Placer and Yuba County.

The only mention of leakage was in response to a question posed to Dave Schmall the Union Publisher, about the papers coverage of South County. He responded that The Union would be increase South County coverage in the hope of luring more people to come up the hill to shop rather than going to Auburn.

In retrospect, I am surprised that the ERC Board was not more interested in the economic impact that increases sales taxes might have on the growing business leakage to Placer County, as more people are shopping in the “big box” stores in North Auburn.  Target is just finishing up a major upgrade to come a Super Target — one stop shopping for anything a family could need.  This is in competition with  WalMart which will some become a reality in Auburn.

I have serious doubts that the real money difference between the increased sale tax will make much of a difference to most people’s shopping habits. Most shoppers are more interested in the increased selection in the big box stores, more quality and pricing options to find the right product quality at the right price.

There is more online shopping now than every before.  In the retail industry, 16% of search queries come from mobile web usage. It was only 10% in 2011. Even with Amazon now collecting the CA sales tax, the prices are much lower than at local stores. And, with the price of gas who is willing to drive around looking for just the right product and the right prices, when it can be found on line, and delivered to the door the next day?

Our insurance company, USAA, now has an online shopping mall called Member Shop with reduced prices and in some cases free shipping for members. The stores in the mall include many of the big box stores that are now going on line to compete with Amazon, who keeps expanding the selection options.

The real solution to the brick and mortar leakage is to have our own “big box” stores in Nevada County. If we could stop the leakage and started collecting those tax dollars locally, the cities may not need a tax increase.

I am assuming they will soon be getting revenue check from the state for the Amazon collected sales taxes.


About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

2 Responses to Sale Taxes and Leakage

  1. gjrebane says:

    It appears that putting the sales tax revs into the general fund makes it clear that there is no intention to start making up the cities’ unfunded liabilities accrued by their employees’ pension funding underruns.

  2. Arthur M. Day. says:

    Keep your Groonies from getting bored, start the rumor that Walmart is coming to Nevada City.

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