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General Fund Revenue
Sales and Use Tax: $29.347 Billion
Receipts from sales and use taxes, the state's second largest revenue source, are expected to contribute 29 percent of all General Fund revenues and transfers in 2007-08. Figure REV-06 displays sales and use tax revenues for the General Fund, as well as special state funds, for 2005-06 through 2007-08.
The sales tax applies to sales of tangible personal property in California; the companion use tax applies to property purchased outside the state for use within California. Most retail sales and leases are subject to the tax. Exemptions from the tax for necessities such as food for home consumption, prescription drugs, and electricity make the tax less regressive. Other exemptions provide tax relief for purchasers of particular products - e.g., farm equipment, custom computer programs, or materials used in space flights.
The largest single component of the sales tax base is new motor vehicle sales, accounting for 11.5 percent of all sales in 2005. Other transportation purchases and fuel sales represented 19.7 percent and 8.6 percent of all sales, while building-related purchases accounted for 14.3 percent.
Taxable sales grew by 7.4 percent in 2005. Preliminary data for the first three quarters indicate that taxable sales for the year are expected to grow by 4.5 percent in 2006. Taxable sales are anticipated to slow in 2007 due to decreased auto sales and a slower housing market, increasing by only 3.1 percent over 2006 sales. In 2008, growth of 5.4 percent is expected as housing and auto sales rebound.
Sales and use tax revenues are forecast relating taxable sales to economic factors such as income, employment, housing starts, new vehicle sales, and inflation. The estimate for 2007-08 includes $35 million in additional revenues from making permanent the use tax on vessels, vehicles, and aircraft brought into the state less than one year from purchase. Another $12.1 million in General Fund revenue will result from strengthened customs use tax enforcement on import products by the Board of Equalization (BOE).
Current law requires the transfer of some gasoline and diesel fuel sales tax revenues from the General Fund to the Public Transportation Account (PTA). (The transportation community refers to a portion of this as "spillover"). In 2006-07, the first $200 million of spillover revenues that would otherwise be transferred to the PTA was retained in the General Fund; the next $125 million was transferred to the Bay Area Toll Account. The Administration proposes to allocate $340 million of spillover revenue in 2007-08 to a fund to service debt on transportation bonds.
Figure REV-07 displays the individual elements of the state and local sales tax rates. Figure REV-08 shows combined state and local tax rates for each county.
The Board of Equalization, which administers the sales and use tax, provides additional information in its annual report, which is available on its website, www.boe.ca.gov. Information on sales tax exemptions is included in the Department of Finance's Tax Expenditure Report.
CHAPTER HIGHLIGHTS for
Revenue Estimates Back to Top
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - Revenue Estimates (pdf * - 231K)
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Provides this entire Revenue Estimates Chapter in pdf format.
SCHEDULE 2 - Summary of State Tax Collections (pdf * - 9K) -
State Tax Collections per capita and per $100 of personal income.
SCHEDULE 3 - Comparative Yield of State Taxes (pdf * - 12K) -
Revenues for Major State Taxes from 1970-71 through 2007-08.
SCHEDULE 8 - Comparative Statement of Revenues (pdf * - 20K) -
Detail of General and special fund revenues by source for the past, current, and budget years within the following categories: (1) major taxes and licenses, (2) minor revenues, and (3) transfers and loans.
ADDITIONAL INFORMATION Back to Top
Board of Equalization
This site provides information about taxes levied on property, sales, fuel, cigarettes, and alcoholic beverages. The Board prepares an annual report which can be located using that site's search function.
Franchise Tax Board
This site provides information about taxes levied on personal income and on corporations. The Board prepares an annual report which can be located using that site's search function.
Tax Expenditure Report
The Department of Finance annually updates this report on major tax exemptions, exclusions, and credits. This report is posted on Finance's website within the "Financial and Economic Data" page.
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