10 States Where Taxes Are Going Up

© Thinkstock
© Thinkstock

Some states, still facing tight budgets after years of recession and slow recovery, are turning to tax increases to make up for the shortfalls. In some states, you’ll soon pay more for Gucci bags and other luxury goods. In others, soft drinks, cigarettes, gasoline and live entertainment will cost more.

Pay attention even if your state isn’t on this list. Some of the taxes are aimed at tourists and motorists passing through the states. And many other states may follow suit with similar tax hikes if these states’ efforts prove successful at raising revenues without upsetting voters.

CONNECTICUT

Buying a pair of Jimmy Choo shoes or even a T-shirt from the Gap will cost a little more in the Constitution State under a budget deal that is expected to yield nearly $1.7 billion in new revenue.

Starting July 1, yachts and other luxury items will be taxed at 7.75%, up from 7%, as part of a state budget plan for the next two years. And clothing and shoes under $50 will no longer be exempt from the state’s 6.35% sales tax.

The state tax on cigarettes also will climb — from $3.40 to $3.65 per pack on October 1, 2015, and to $3.90 per pack on July 1, 2016.Connecticut’s wealthiest citizens and businesses will feel the biggest pinch. A projected $300 million will come from the addition of two income tax brackets above the state’s current highest rate of 6.7%. The new top rate: 6.9%.

GEORGIA

Hotel guests will have to pay $5 more each night, thanks to a tax package that could yield up to $1 billion to fix the Peach State’s backlog of road and bridge repairs.

Drivers and owners of electric cars will also have to pay more. Motorists will pay an additional 6 cents for each gallon of gas starting July 1, 2016, under a new law that moves the state from a series of sales and excise taxes on gasoline to a single excise tax. Owners of electric vehicles face new registration fees ($200 a year for noncommercial electric vehicles, $300 for commercial). Meanwhile, heavy trucks will have to pay an extra “highway impact fee” of $50 to $100.

Counties also were given the green light to ask voters to approve a sales tax of up to 1% to fund local transportation projects.

KANSAS

Kansans will pay more for nearly everything they buy in the Sunflower State. Lawmakers raised the state’s sales tax to 6.5% to close a $400-million budget gap. The hike came three years after Gov. Sam Brownback, a Republican, backed the largest tax cut in the state’s history.

The new rate, up from 6.15%, is effective July 1. Coupled with local sales taxes, Kansas now leapfrogs California to have the eighth-highest sales tax in the United States, according to the Tax Foundation.

Smokers will pay more, too. The per-pack tax on cigarettes goes to $1.29, from 79 cents, effective July 1. And beginning July 1, 2016, people who use e-cigarettes will be taxed 20 cents per milliliter of consumable material.

NEVADA

What happens in Vegas may stay in Vegas, but so will more of your money, thanks to a historic tax package that is expected to raise $1.5 billion over the next two years. Everything from hailing a cab, smoking and attending events will cost more in the Silver State.

Taxi passengers, including Uber users, will see a 3% excise tax on all fares, and the cigarette tax will go up a buck, to $1.80 per pack. That’s still a far cry from the nation’s highest tobacco tax, $4.35 per pack in New York state.Most venues with live entertainment will have to charge a 9% ticket tax, instead of a sliding scale of 5% to 10%. The tax applies to fees for escort services, but not to rates charged by prostitutes at the state’s legal brothels.

Finally, a 0.35% sales tax boost that was due to expire became permanent. Nevada relies heavily on the sales tax and tourism because it doesn’t have an income tax. Most of the increases start July 1, although the live entertainment levy kicks in on October 1.

SOUTH DAKOTA

Motorists will have to pay more, but in return they’ll be able to drive faster on two major highways.

State lawmakers passed sweeping legislation earlier this year that raised the gas tax by 6 cents per gallon on April 1, to 28 cents. It also added 1 percentage point to the excise tax on vehicle purchases, making it 4%. The legislation allows counties and townships to raise property taxes for road and bridge work, if voters agree. The entire funding package is expected to raise $85 million per year for state and local infrastructure work.

In exchange, drivers can legally travel 80 miles per hour on Interstates 90 and 29, 5 mph faster than the old maximum speed.

UTAH

Motorists will pay 5 cents more per gallon at the pump, starting Jan. 1, 2016. The revenue will help fund transportation projects and maintenance. In addition, counties can add a sales tax increase of a quarter-cent per dollar if voters give an OK. Before the hike, the Beehive State faced an $11-billion funding gap for critical road projects through 2040.

Meanwhile, homeowners will see a boost of $50 on property tax bills in November. The $75 million in new revenue will be used for education programs.

VERMONT

Soft drinks and cigarettes will cost more, while wealthy taxpayers will be able to take fewer deductions. The changes were aimed at closing a budget gap of nearly $100 million.

For the first time, Vermont’s 6% sales tax will hit soft drinks. The tax applies to nonalcoholic beverages that contain natural or artificial sweeteners, but not to those containing milk or milk substitutes, or to drinks that include at least 50% vegetable juice or fruit juice by volume. Also, smokers will pay an extra 33 cents in state taxes for cigarettes, raising the rate to $3.08 a pack by next year.

Millionaires in Vermont could pay about $5,000 more in taxes. The plan limits the amount filers can deduct from income taxes to $15,000 for an individual and $31,500 for a household. Vermonters also won’t be able to deduct from this year’s tax liability what they paid in state and local taxes the previous year.

IDAHO, IOWA, NEBRASKA

Gas tax increases are also coming in Idaho (7 cents a gallon), Iowa (10 cents per gallon) and Nebraska (a 6-cent hike spread over four years).

Other states are likely to boost gas taxes in the coming years as Congress struggles to pass a long-term surface transportation bill to fund road and bridge repairs, and as the cost of deferred maintenance soars.

Written by Kiplinger

(Source: Kiplinger)

Eurozone Reaches Deal on Greece

© European Pressphoto Agency
© European Pressphoto Agency

BRUSSELS—Eurozone leaders said Monday morning that they would give Greece up to €86 billion ($96 billion) in fresh bailout loans as long as the government of Prime Minister Alexis Tsipras manages to implement a round of punishing austerity measures in the coming days.

The rescue deal—hammered out after 22 hours of, at times acrimonious, negotiations between the currency union’s leaders and finance ministers—requires the Greek left-wing government’s near-total surrender to its creditors’ demands.

But it gives the country at least a fighting chance to hold on to the euro as its currency.

“The deal is hard,” Mr. Tsipras said after the summit, warning that the measures required by creditors will send the country’s economy further into recession.

European stocks rallied early Monday on the news. By mid-morning, the Stoxx Europe 600 was up 1.5%, building on Friday’s hefty gains. Germany’s DAX rose 1.4%, France’s CAC-40 added 1.9% and London’s FTSE 100 rose 0.6%. In southern Europe, Italy’s FTSE MIB climbed 1.2% and Spain’s IBEX gained 1.5%.

By Wednesday, Athens’s Parliament has to pass pension overhauls and sales tax increases that voters overwhelmingly rejected in a referendum just one week ago. Greece now has to implement European Union rules that make it easier to wind down broken banks, including by sharing the cost with investors and creditors.

“Trust needs to be restored,” German Chancellor Angela Merkel said at a news conference.

“The agreement was laborious. It took time but it was done,” said Jean-Claude Juncker, the president of the European Commission.

“There won’t be a Grexit,” Mr. Juncker added, referring to a Greek exit from the eurozone.

In a concession to Greece, eurozone governments will consider measures to make the country’s debt more manageable, for instance by giving it more time to repay rescue loans.

A detailed rescue program that will have to be negotiated after the first overhauls and cuts have been implemented will contain measures that go far beyond the kind of oversight and external control other governments under eurozone bailouts have endured.

The most divisive step demanded by Greece’s creditors is the creation of a fund that would hold some €50 billion in state-owned assets slated to be privatized or wound down in the coming years. The fund will be under European supervision, Ms. Merkel said.

Most of the money raised will go to pay off Greece’s debt and help recapitalize its broken banks, while €12.5 billion can be used for investment, said Ms. Merkel.

“The advantages outweigh the disadvantages,” she said about the deal, while warning that Greece’s path back to growth will be long and arduous.

Despite these big concessions by Mr. Tsipras, Greece’s future in Europe’s currency union still hangs in the balance.

Passing the tough new bailout measures through Greece’s Parliament could split Syriza and its right-wing coalition partner, the Independent Greeks, which in turn could trigger fresh elections. And there wasn’t an answer on when the country’s banks—closed for most business for the past two weeks—will reopen or how Greece will make a €4.2 billion payment to the European Central Bank on July 20.

The eurozone’s finance ministers will discuss how to come up with a mechanism to meet Greece’s short-term financial needs “as a matter of urgency,” Donald Tusk, the president of the European Council who led the talks, said after the summit.

A statement issued after the summit says Greece will need between €82 billion and €86 billion in fresh funding over the next three years. Between €10 billion and €25 billion will be required to recapitalize Greek banks, damaged by months of deposit outflows and two weeks of capital controls.

French President François Hollande, whose government lobbied hard for Greece in recent weeks, said he expects the ECB to step in with additional liquidity for Greek lenders, as long as Athens follows through on a deal. That could allow banks to gradually reopen.

“That was the indispensable condition, but it will take a few days,” Mr. Hollande said.

In a concession to Greece, eurozone governments will discuss ways to make the country’s debt load more manageable later this year.

“There will be a reprofiling of the debt by extending maturities and doubtless a negotiation on the interest rates,” said Mr. Hollande. “That is part of the agreement.” Ms. Merkel stressed that there won’t be a cut to the nominal value of rescue loans.

European officials said negotiations came close to collapse at some points during the night, when Mr. Tsipras argued that some of the creditors’ demands would be impossible to meet. Germany in particular has been driving a hard line, which for much of the evening included the possibility of a “time-out” for Greece from the currency union.

“In Germany there was strong opinion for Grexit,” Mr. Hollande said, “and not just in Germany.”

“I refused this solution,” he added.

As part of the deal, Greece’s administration will be modernized and depoliticized, Ms. Merkel said, adding that the Athens government will be expected to make first proposals by July 20.

The measures laid out in Monday’s statement reach deep into the workings of Greece’s economy. They include changes to labor laws that would make it easier to fire workers, as well as the further liberalization of markets for products such as pharmaceuticals, milk and baked goods, the statement said. Greece also would have to privatize state assets, including the electricity network operator.

Contrary to Greece’s wishes, the International Monetary Fund will remain involved in bailing it out even after the fund’s existing rescue program expires in March. Athens defaulted on a €1.56 payment to the IMF on June 30 and is unlikely to make a €456 million payment due Monday. The summit statement said it was important for the government to cover the failed payments.

“It has been a laborious night, but I think it is a good step to rebuild confidence,” said IMF Managing Director Christine Lagarde.

Written by Gabriele Steinhauser, Viktoria Dendrinou, Matthew Dalton of The Wall Street Journal

(Source: MSN)