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If you sell big-ticket items like RVs, a 1% increase in the sales tax is a big deal, which helps explain why RV dealers are among the most vocal opponents of California’s proposed sales tax increase, according to the San Bernardino County Sun and The Press-Enterprise of Riverside, Calif.
On a $125,000 motorhome, an additional 1% sales tax adds $1,250 to the purchase price. So, California dealers, including Bob Barouti, president of multilocation Southern California dealership group Giant RV, are worried the higher tax, which still is in the proposal stage, would lead to California residents buying more RVs in other states, the Sun reported.
Barouti thinks the higher sales tax would have a “devastating effect” on RV and auto dealerships in California. In addition to forcing business out of state, Barouti said, it would encourage some other car and RV buyers to pursue loopholes to avoid paying the tax.
Meanwhile, J.R. Raymond, sales manager of Mike Thompson’s RV Super Stores in Colton, told the Press-Enterprise he is gently encouraging prospects to buy now. When customers say they are thinking of buying next summer or next year, Raymond said, he will “bring up the fact that (Gov.) Gray Davis is talking about raising the sales tax.”
California’s sales tax currently is 7.25 cents per $1. A 1-cent increase would make California’s sales tax the highest in the nation, according to the Press-Enterprise. However, Davis is proposing the tax increase to help erase what he estimate’s to be $34.6 billion budget shortfall.
One RV shopper interviewed by the Press-Enterprise said she would buy out of state if California raises its sales tax. Consequently, she believes Davis’ plan to raise more revenue with the higher tax will backfire.