Believe it or not, The Beaver State is one of just five states in the U.S. that are without a sales tax. The others include New Hampshire, Montana, Delaware, and Alaska.
According to Investopedia, states are not subject to federal regulation when it comes to sales tax laws, which means that each state can control its own base sales tax rate. There can also be taxes for residents and visitors to pay for a variety of retail-related services. Just look at Montana, which has up to a 3% sales tax in popular tourist areas and resort towns. Or Alaska, where there’s a 5% sales tax in the city of Juneau. The rest of the cities in the state can impose a sales tax on certain goods and services, too.
And, while we’re on the list of sales tax-free states, that doesn’t mean cities and municipalities have to go completely sales-tax free. For example, Yachats and Ashland—both popular tourist destinations—charge a 5% sales tax on prepared food and nonalcoholic beverages. Leaders in both cities have said in the past the sales tax has proved to be a reliable way to pay for new infrastructure, according to an article published in the Bend Bulletin back in 2008.
Sure, a general sales tax for the entire state has been considered in the past, and yet it’s 2016, and we’re still chugging along without one. State politicians have argued that it could be a way to raise a lot of money. And the numbers don’t lie. In 2013, The Oregonian reported that a 2.5% sales tax could have the potential to raise more than $3 billion in just over two years—an amount that could fill in a funding gap created by property tax limits set in the 1990s. Voters in past elections, however, have slammed down such proposals on the ballot.
What does that mean for Oregonians when it comes to funding our fair state? We rely more on income tax to pay for things. Other taxes are in there helping out, too, like personal incomes, incomes on the corporate level, monies collected from vehicle licenses, and property taxes.
To say that living in a sales tax-free state might cause budgeting hiccups at the state government level from time to time is fair, but every system has its issues. In the meantime, we get our beer, late-night Chinese takeout from Safeway (that counts as prepared food), and outlet shopping items for less when paying at the counter.
By Abbie Tumbleson